While most studies have suggested multipotential stromal cell or mesenchymal stem cell (MSC) therapies are useful for immune-mediated diseases, MSCs' immunomodulatory effects were not entirely reproduced in some studies, indicating the necessity to determine the underlying mechanism of MSCs' effects on immune response regulation to maximize their immunomodulatory effects. We have identified the transcription factor early growth response gene-2 (EGR2) as a novel molecular switch regulating known immunomodulatory molecules in human MSCs. EGR2 binds to the promoter regions of these genes, interleukin-6 (IL6), leukemia inhibitory factor (LIF), indoleamine dioxygenase-1 (IDO1), and cyclooxygenase-2/prostaglandin-endoperoxide synthase 2 (COX2/PTGS2), and siRNA against EGR2 was shown to downregulate these genes and reduce the production of prostaglandin E2, an immunomodulatory mediator produced downstream of COX2/PTGS2. Moreover, EGR2 knockdown restores T-lymphocyte proliferation reduced by MSC coculture. Therefore, EGR2 is a potential target for the optimization of immunomodulatory properties of MSC-based therapies.