Mesenchymal stem cells (MSCs) are multipotent stromal cells with immunosuppressive properties. They have emerged as a very promising treatment for autoimmunity and inflammatory diseases such as rheumatoid arthritis. Recent data have identified that GM-CSF-expressing CD4 T cells and Th17 cells have critical roles in the pathogenesis of arthritis and other inflammatory diseases. Although many studies have demonstrated that MSCs can either prevent or suppress inflammation, no studies have addressed their modulation on GM-CSF-expressing CD4 T cells and on the plasticity of Th17 cells. To address this, a single dose of human expanded adipose-derived mesenchymal stem cells (eASCs) were administered to mice with established collagen-induced arthritis. A beneficial effect was observed soon after the infusion of the eASCs as shown by a significant decrease in the severity of arthritis. This was accompanied by reduced number of pathogenic GM-CSF 1 CD4 1 T cells in the spleen and peripheral blood and by an increase in the number of different subsets of regulatory T cells like FOXP3 1 CD4 1 T cells and IL10 1 IL17 2 CD4 1 T cells in the draining lymph nodes (LNs). Interestingly, increase numbers of Th17 cells coexpressing IL10 were also found in draining LNs. These results demonstrate that eASCs ameliorated arthritis after the onset of the disease by reducing the total number of path-ogenic GM-CSF 1 CD4 1 T and by increasing the number of different subsets of regulatory T cells in draining LNs, including Th17 cells expressing IL10. All these cellular responses, ultimately, lead to the reestablishment of the regulatory/inflammatory balance in the draining LNs. STEM CELLS 2015; 00:000—000 SIGNIFICANCE STATEMENT We identify, for the first time, a novel mechanism by which adipose-derived mesenchymal stem cells modulate ongoing immune responses by promoting an early adaptive T cell signature characterized by decreased levels of pathogenic GM-CSF-secreting CD41, superscript T cells, increased levels of regulatory T cells and plasticity of effector Th17 cells towards an IL10-driven anti-inflammatory response thus shifting the inflammatory/regulatory balance from GM-CSF inflammatory predominance to IL10 regulatory predominance. Altogether, these data will offer much needed further insight into the mechanisms of action of mesenchymal stem cells for their translation to the clinic.