Mesenchymal stem cells (MSCs) are multipotential nonhematopoietic progenitor cells capable of differentiating into multiple lineages of the mesenchyme. MSCs have emerged as a promising therapeutic modality for tissue regeneration and repair. Further clinical interest has been raised by the observation that MSCs are immunoprivileged and, more importantly, display immunomodulatory capacities. Although the mechanisms underlying the immunosuppressive effects of MSCs have not been clearly defined, their immunosuppressive properties have already been exploited in the clinical setting. The aim of this review is to critically discuss the immunogenicity and immunomodulatory properties of MSCs, both in vitro and in vivo, the possible underlying mechanisms, the potential clinical use of MSCs as modulators of immune responses in vivo, and to indicate clinical safety concerns and recommendations for future research.