Mesenchymal stem cells (MSCs) are multipotent stem cells that can exert immunomodulatory capacity upon stimulation with pro-inflammatory cytokines. Our previous work has identified Cullin 4B (CUL4B), a scaffold protein in the CUL4B-RING E3 ligase (CRL4B) complex, as a key regulator in the differentiation of MSCs. Here, we demonstrate the critical role of CUL4B in regulating the immunosuppressive function of MSCs. When stimulated with pro-inflammatory cytokines, MSCs lacking CUL4B display enhanced immunosuppressive capacity, which is mediated by the elevated inducible nitric oxide synthase (iNOS). TGF-β signaling can suppress iNOS by inhibiting its transcription as well as promoting its protein degradation. We show that the CRL4B complex cooperates with PRC2 complex and HDACs to repress transcription of Dlx1 and Pmepa1, two inhibitors of TGF-β signaling, leading to decreased expression and accelerated degradation of iNOS. Our study unveils the CRL4B complex as a potential therapeutic target in promoting the immunosuppressive capacity of MSCs.