Bone marrow-derived mesenchymal stem cells (MSCs) are known to interact with hematopoietic stem cells (HSCs) and immune cells, and represent potential cellular therapy to enhance allogeneic hematopoietic engraftment and prevent graft-versus-host disease (GVHD). We investigated the role of human MSCs in NOD-SCID mice repopulation by unrelated human hematopoietic cells and studied the immune interactions between human MSCs and unrelated donor blood cells in vitro. When hematopoietic stem cell numbers were limited, human engraftment of NOD-SCID mice was observed only after coinfusion of unrelated human MSCs, but not with coinfusion of mouse mesenchymal cell line. Unrelated human MSCs did not elicit T-cell activation in vitro and suppressed T-cell activation by Tuberculin and unrelated allogeneic lymphocytes in a dose-dependent manner. Cell-free MSC culture supernatant, mouse stromal cells and human dermal fibroblasts did not elicit this effect. These preclinical data suggest that unrelated, human bone marrow-derived, culture-expanded MSCs may improve the outcome of allogeneic transplantation by promoting hematopoietic engraftment and limiting GVHD and their therapeutic potential should be tested in clinic.