Mesenchymal stem cells (MSCs) have been successfully used for the treatment of experimental intracerebral hemorrhage (ICH). However, the neuroprotective mechanisms through which MSCs improve neurological functional recovery are not fully understood. In the present study, we tested the hypothesis that treatment with MSCs inhibits inflammation after ICH and reduces subsequent brain injury. Adult rats subjected to stereotaxic injection of collagenase VII were transplanted with a subpopulation of human bone marrow-derived MSCs (hBMSCs), termed fetal liver kinase (Flk)-1(+) hBMSCs, or saline into the ipsilateral brain parenchyma 1 day after ICH. Significant recovery of behavior was noted in the Flk-1(+) hBMSC-treated rats beginning 3 days after ICH compared with the control group. Brain water content was significantly decreased in the ipsilateral hemispheres of the Flk-1(+) hBMSC-treated rats when compared with the controls 3 days after ICH. The relative hemorrhage volume was reduced 55 days after Flk-1(+) hBMSC treatment. However, this change was not statistically significant. Flk-1(+) hBMSCs significantly inhibited the proliferation of rat peripheral blood mononuclear cells (rPBMCs) induced in a mixed lymphocyte reaction. Consistently, we found a significant anti-inflammatory effect of Flk-1(+) hBMSCs on the ICH brain, including a decrease in neutrophil infiltration and microglial activation in the peri-ICH area, and downregulation of inflammatory mediators, such as interleukin (IL)-1β, IL-2, IL-4, IL-6, and tumor necrosis factor (TNF)-α. In addition, Flk-1+ hBMSC treatment significantly increased vascular density in the peri-ICH area, and transplanted Flk-1(+) hBMSCs were found to be incorporated into the cerebral vasculature 55 days after transplantation. Overall, these data suggest an essential role for Flk-1(+) hBMSCs in reducing inflammatory infiltration, promoting angiogenesis, and improving functional recovery after ICH in rats.