Sepsis is a risk factor associated with increasing neonatal morbidity and mortality, acute lung injury, and chronic lung disease. While stem cell therapy has shown promise in alleviating acute lung injury, its effects are primarily exerted through paracrine mechanisms rather than local engraftment. Accumulating evidence suggests that these paracrine effects are mediated by mesenchymal stem cell (MSC)-derived small extracellular vesicles (sEVs), which play a critical role in immune system modulation and tissue regeneration. sEVs contain a diverse cargo of mRNA, miRNA, and proteins, contributing to their therapeutic potential. We hypothesize that sEVs derived from three distinct sources, cord blood plasma (CBP), Wharton jelly (WJ), and placental (PL) MSCs, may prevent the cytotoxicity induced by E. coli lipopolysaccharide (LPS) in lung alveolar epithelial cells. Objective: To determine the effects of CBP-, WJ-, and PL-MSCs-derived sEVs on cell viability, apoptosis, and proinflammatory cytokine production in alveolar epithelial cells and monocytes following LPS treatment. sEVs were collected from conditioned media of PL-MSCs, WJ-MSCs, and CBP using 50 nm membrane filters. sEVs were characterized based on nanoparticle tracking analysis (NTA), transmission electron microscopy (TEM), and Western blotting techniques. The protein concentration of isolated sEVs was used to standardize treatment doses. A549 cells and monocyte THP-1 cells were cultured and exposed to LPS in the presence or absence of sEVs for 72 h. Cell viability was measured using CellTiter-Glo 2.0 chemiluminescence-based assay. For cytokine analysis, A549 and THP-1 cells were pre-incubated for 24 h with or without PL- and CBP-sEVs, followed by exposure to LPS or control conditions for an additional 24 h. The conditioned media were collected, and interleukin-6 (IL-6) and interleukin-8 (IL-8) levels were quantified using ELISA. LPS treatment significantly reduced the viability of both A549 and THP-1 cells. The presence of CB- or WJ-sEVs significantly increased cell viability compared to controls. Cells treated with PL-sEVs showed increased cell viability but did not reach statistical significance. LPS-treated cells showed a significant increase in apoptosis and elevated levels of pro-inflammatory cytokines IL-6 and IL-8. All three sEVs types (CBP-, WJ-, and PL-sEVs) significantly reduced LPS-induced apoptosis and IL-6 release. Interestingly, while WJ-sEVs decreased IL-8, both CBP- and PL-sEVs led to an increase in IL-8 compared to their respective controls. CBP-, PL-, and WJ-derived sEVs demonstrated protective effects against LPS-induced injury in alveolar epithelial cells and monocytes, as evidenced by increased cell viability and modulation of pro-inflammatory cytokine release. These findings suggest that placenta-derived sEVs have the potential to modulate the immune response, mitigate inflammation, and prevent end-organ damage in neonatal sepsis.