Background: Mesenchymal stem cells (MSCs) are self-renewing, multipotent progenitor cells with multilineage potential to differentiate into all cell types of mesodermal origin, such as adipocytes, osteocytes and chondrocytes. Mesenchymal stem cells (MSCs) are adult stem cells which can be isolated from human and animal sources. Objective: Besides the differentiation potential of MSCs, these also regulate the immune response in numerous ailments. The present review expeditesthe immunomodulating prospective of MSCs. Method: Scrupulous search of the literature and patents available on MSCs and their role in the immunomodulation was carried outusing Medline, PubMed, PubMed Central, Science Direct and other scientific databases. The retrieved information has been analyzed and compiled. Results: MSCs have unique regulation of microenvironment in the host tissue by secreting cytokines and immune-receptors which results in immunomodulatory effects. MSCs an effective tool in the treatment of chronic diseases because of its property to secretion of anti-inflammatory molecules, having multilineage potential and immunomodulation. Conclusion: Present review is focused on the use of MSCs due to their unique immunomodulatory characteristics. MSCs reach to the site of inflammation and interact with immune cells to bring immunosuppressive and anti-inflammatory effects. Along with these unique therapeutic properties MSCs may be a useful therapeutic approach for various disorders.