Mesenchymal stem cells (MSC) are a rare subset of stem cells residing in the bone marrow where they closely interact with hematopoietic stem cells and support their growth and differentiation. MSC can differentiate into multiple mesenchymal and non‐mesenchymal lineages, providing a promising tool for tissue repair. In addition, MSC suppress many T cell, B cell and NK cell functions and may affect also dendritic cell activities. Due to their limited immunogenicity, MSC are poorly recognized by HLA‐incompatible hosts. Based on these unique properties, MSC are currently under investigation for their possible use to treat immuno‐mediated diseases. However, both their condition of immunoprivilege and their immunosuppressive function have recently been challenged when analyzed under particular experimental conditions. Thus, it is likely that MSC effects on the immune system may be deeply influenced not only by cell‐to‐cell interactions, but also by environmental factors shaping their phenotype and functions.