Mesenchymal stem cells (MSCs) can inhibit T cell proliferation; however, the underlying mechanisms are not clear. In this study, we investigated the mechanisms of the immunoregulatory activity of MSCs on T cells. Irradiated MSCs co-cultured with either na?ve or pre-activated T cells in a mixed lymphocyte reaction (MLR) significantly suppressed T cell proliferation in a dose-dependent manner, irrespective of allogeneic disparity between responders and MSCs. Transwell assays revealed that the suppressive effect was primarily mediated by soluble factors that induced apoptosis. Splenocytes stimulated with alloantigen in the presence of the MSC culture supernatant (CS) produced a significant amount of IL-10, which was attributed to an increase in the number of IL-10 secreting cells, confirmed by an ELISPOT assay. The blockade of IL-10 and IL-10 receptor interaction by anti-IL-10 or anti-IL-10-receptor antibodies abrogated the suppressive capacity of MSC CS, indicating that IL-10 plays a major role in the suppression of T cell proliferation. The addition of 1-methyl-DL-tryptophan (1-MT), an indoleamine 2,3-dioxygenase (IDO) inhibitor, also restored the proliferative capacity of T cells. In conclusion, we demonstrated that soluble mediators from culture supernatant of MSCs could suppress the proliferation of both naive and pre-activated T cells in which IL-10 and IDO play important roles.