Human mesenchymal stromal cells (MSC) can suppress T-cell activation in vitro in an indoleamine 2,3-dioxygenase (IDO)-dependent manner. However, their clinical effects on immune ailments have been inconsistent, with a recent phase III study showing no benefit in acute graft-versus-host disease (GvHD). We here tested the hypothesis that the banked, cryopreserved MSC often used in clinical trials display biologic properties distinct from that of MSC in the log phase of growth typically examined in pre-clinical studies. In freshly thawed cryopreserved MSC derived from normal human volunteers, we observed that MSC up-regulate heat-shock proteins, are refractory to interferon (IFN)-γ-induced up-regulation of IDO, and are compromised in suppressing CD3/CD28-driven T cell proliferation. Immune suppressor activity, IFN-γ responsiveness and induction of IDO were fully restored following 24 h of MSC tissue culture post-thaw. These results highlight a possible cause for the inefficacy of MSC-based immunotherapy reported in clinical trials using cryopreserved MSC thawed immediately prior to infusion.