P>There is emerging interest in the application of mesenchymal stem cells (MSC) for the prevention and treatment of autoimmune diseases, graft-versus-host disease and allograft rejection. It is, however, unknown how inflammatory conditions affect phenotype and function of MSC. Adipose tissue-derived mesenchymal stem cells (ASC) were cultured with alloactivated peripheral blood mononuclear cells (PBMC) (mixed lymphocyte reaction: MLR), with proinflammatory cytokines [interferon (IFN)-gamma, tumour necrosis factor (TNF)-alpha and interleukin (IL)-6] or under control conditions, and their full genome expression and function examined. Proinflammatory cytokines mainly increased indoleamine-2,3-dioxygenase expression, whereas ASC cultured with MLR showed increased expression of COX-2, involved in prostaglandin E-2 production. Both conditions had a stimulatory, but differential, effect on the expression of proinflammatory cytokines and chemokines, while the expression of fibrotic factors was decreased only in response to proinflammatory cytokines. Functional analysis demonstrated that inflammatory conditions affected morphology and proliferation of ASC, while their differentiation capacity and production of trophic factors was unaffected. The immunosuppressive capacity of ASC was enhanced strongly under inflammatory conditions. In conclusion, ASC showed enhanced immunosuppressive capacity under inflammatory conditions, while their differentiation capacity was preserved. Therefore, in vitro preconditioning provides ASC with improved properties for immediate clinical immune therapy.