Mesenchymal stem cells (MSCs) are multipotent cells that can be derived either from the bone marrow (bMSCs) or adipose tissue (aMSCs). We have compared the immune regulatory properties of cells derived from bone marrow and adipose tissue to provide a theoretical basis for the choice of stem cell source for transplantation. The phenotypes of bMSCs and aMSCs are similar, differing only in the expression of CD106. aMSCs proliferate faster than bMSCs, but aMSCs suppressed T-lymphocyte proliferation and activation more poorly than bMSCs. Thus cell origin and abundance are important factors in determining the suitability of MSCs for transplantation. Adipose tissue offers a more promising source of cells for such an application.