In cell therapy, noninvasive monitoring of in vivo cell fate is challenging. In this study we investigated possible differences in R1, R2 or R2* relaxation rate as a measure of overall cell viability for mesenchymal stem cells labeled with Gd-liposomes (Gd-MSCs) or iron oxide nanoparticles (SPIO-MSCs). Cells were also transduced with a luciferase vector, facilitating a correlation between MRI findings and cell viability using bioluminescence imaging (BLI). Viable Gd-MSCs were clearly distinguishable from nonviable Gd-MSCs under both in vitro and in vivo conditions, clearly differing quantitatively (ΔR1 and ΔR2) as well as by visual appearance (hypo- or hyperintense contrast). Immediately post-injection,viable Gd-MSCs caused a substantially larger ΔR2 and lower ΔR1 effect compared with nonviable MSCs. With time, the ΔR1 and ΔR2 relaxation rate showed a good negative correlation with increasing cell number following proliferation. Upon injection, no substantial quantitative or visual differences between viable and nonviable SPIO-MSCs were detected. Moreover, nonviable SPIO-MSCs caused a persisting signal void in vivo, compromising the specificity of this contrast agent. In vivo persistence of SPIO particles was confirmed by histological staining. A large difference was found between SPIO- and Gd-labeled cells in the accuracy of MR relaxometry in assessing the cell viability status. Gd-liposomes provide a more accurate and specific assessment of cell viability than SPIO particles. Viable Gd cells can be differentiated from nonviable Gd cells even by visual interpretation. These findings clearly indicate Gd to be the favourable contrast agent in qualitative and quantitative evaluation of labeled cell fate in future cell therapy experiments. Copyright © 2012 John Wiley & Sons, Ltd.