Adult mesenchymal stem cells (MSCs) have recently become a potent tool in regenerative medicine. Due to certain shortcomings of obtaining bone marrow MSCs, alternate sources of MSCs have been sought. In this work, we studied MSCs from dental pulp (DP-MSCs) and dental follicle (DF-MSCs), isolated from the same tooth/donor, to define differences in their phenotypic properties, differentiation potential, and immunomodulatory activities. Both cell types showed colony-forming ability and expressed typical MSCs markers, but differed in the levels of their expression. DF-MSCs proliferated faster, contained cells larger in diameter, exhibited a higher potential to form adipocytes and a lower potential to form chondrocytes and osteoblasts, compared with DP-MSCs. In contrast to DF-MSCs, DP-MSCs produced the transforming growth factor (TGF)-β and suppressed proliferation of peripheral blood mononuclear cells, which could be neutralized with anti-TGF-β antibody. The treatment with toll-like receptor 3 (TLR3) agonist augmented the suppressive potential of both cell types and potentiated TGF-β and interleukin-6 secretions by these cells. TLR4 agonist augmented the suppressive potential of DF-MSCs and increased TGF-β production, but abrogated the immunosuppressive activity of DP-MSCs by inhibiting TGF-β production and the expression of indolamine-2,3-dioxygenase-1. Some of these effects correlated with the higher expression of TLR3 and TLR4 by DP-MSCs compared with DF-MSCs. When transplanted in imunocompetent xenogenic host, both cell types induced formation of granulomatous tissue. In conclusion, our results suggest that dental MSCs are functionally different and each of these functions should be further explored in vivo before their specific biomedical applications.