Mesenchymal stem cells derived from the human umbilical cord matrix (hUCMSCs) have great potential for therapeutic use for multiple diseases. The strategy that uses therapeutic gene-transfected hUCMSCs as cellular vehicles for targeted biologic agent delivery has solved the problem of short half-life or excessive toxicity of biological agent(s) in vivo. Interferon-beta (IFN-beta) has demonstrated a potent antitumor effect on many types of cancer cell lines in vivo. The aim of this study was to determine the anti-cancer effect of IFN-beta gene-transfected hUCMSCs (IFN-beta-hUCMSCs) on cells derived from bronchioloalveolar carcinoma, a subset of lung adenocarcinoma that is difficult to treat. The co-culture of a small number of IFN-beta-hUCMSCs with the human bronchioloalveolar carcinoma cell lines H358 or SW1573 significantly inhibited growth of both types of carcinoma cell lines. The culture medium conditioned by these cells also significantly attenuated the growth of both carcinoma cells, but this attenuation was abolished by adding anti-IFN-beta antibody. Finally, systemic administration of IFN-beta-hUCMSCs through the tail vein markedly attenuated growth of orthotopic H358 bronchioloalveolar carcinoma xenografts in SCID mice by increasing apoptosis. These results clearly indicate that IFN-beta-hUCMSCs caused cell death of bronchioloalveolar carcinoma cells through IFN-beta production, thereby attenuating tumor growth in vivo. These results indicate that IFN-beta-hUCMSCs are a powerful anti-cancer cytotherapeutic tool for bronchioloalveolar carcinoma.