We previously demonstrated that mesenchymal stem/stromal cells (MSC) are recruited to tumors and that IFN-β produced by MSC inhibited tumor growth in xenograft models. Because of a deficient immune system, murine xenograft models cannot fully recapitulate tumor and immune cell interactions during progression. Therefore we investigated the capacity of MSC to migrate to and engraft into primary breast tumor sites and subsequently explore mechanisms of tumor inhibition by MSC-delivered IFN-β in a syngeneic, immunocompetent murine model. Herein we report that 1) systemically administrated MSC migrate to established 4 T1 breast cancer sites and localize among the tumor-stroma border and throughout the tumor mass; 2) high levels of IFN-β secreted by MSC are detectable in the tumor microenvironment but not in circulation; 3) intratumorally produced IFN-β inactivates constitutive phosphorylation of signal transducer activator transcription factor 3 (Stat3), Src, and Akt and down-regulates cMyc and MMP2 expression in 4 T1 cells, and 4) in mice with established breast cancer IFN-β expressing MSC administered systemically resulted in inhibition of primary cancer growth and in dramatic reduction of pulmonary and hepatic metastases. 5) MSC-IFN-β treated, but not control mice, maintained normal levels of splenic mature dendritic (DC), CD8+ T cells and CD4+/Foxp3+ regulatory T-cells (Treg). Our findings suggest that MSC are capable of migrating to tumor sites in an immunocompetent environment, that IFN-β produced by MSC suppresses breast cancer growth through inhibition of Stat3 signaling, and dramatically reduces pulmonary and hepatic metastases.