Olfactory ecto-mesenchymal stem cells (OE-MSCs) are a population of cells which has been recognized as a new resident stem cell type in the olfactory lamina propria. OE-MSCs have been shown to exert their immunosuppressive capacity by modulating T cell responses, including up-regulation of regulatory T cells (Tregs) and down-regulation of Th1/Th17 cells. As an inflammatory cytokine, IL-17 plays a critical role in orchestrating the inflammatory response during the development of collagen-induced arthritis (CIA). However, it is unclear whether the increased level of IL-17 may affect the immunosuppressive function of OE-MSCs under inflammatory condition. In this study, we found that IL-17 could significantly reduce the suppressive capacity of OE-MSCs on CD4+ T cells and down-regulate the suppressive factors produced by OE-MSCs. Notably, IL-17 treatment abolished the capacity of OE-MSCs in inducing Treg expansion. In addition, knockdown of IL-17R in OE-MSCs significantly enhanced their therapeutic effect in ameliorating CIA upon adoptive transfer. Moreover, IL-17R knockdown-OE-MSCs could efficiently induce Tregs expansion and reduce Th1 and Th17 responses. Taken together, all these data suggest that IL-17R knockdown in OE-MSCs may provide a novel strategy in maintaining their immunosuppressive properties for the treatment of autoimmune diseases.