The derivation of mesenchymal progenitors from human embryonic stem cells (hESCs) has recently been reported. We studied the immune characteristics of these hESC-derived mesenchymal progenitors (EMPs) and their interactions with T lymphocytes and natural killer cells (NKs), two populations of lymphocytes with important roles in transplantation immunology. EMPs express a number of bone marrow mesenchymal stromal cell (BMMSC) markers, as well as the hESC marker SSEA-4. Immunologically, EMPs do not express HLA-DR or costimulatory molecules. On the other hand, HLA-G, a nonclassic MHC I protein involved in mediating maternal-fetal tolerance, can be found on the surface of EMPs, and its expression is increased after interferon-gamma stimulation. EMPs can suppress CD4(+) or CD8(+) lymphocyte proliferation, similar to BMMSCs. However, EMPs are more resistant to NK-mediated lysis than BMMSCs and can suppress the cytotoxic effects of activated NKs, as well as downregulating the NK-activating receptors NKp30 and NKp46. With their broad immunosuppressive properties, EMPs may represent a new potential cell source for therapeutic use.