Increasing global birth rate, coupled with the aging population surviving into their eighth decade has lead 26 to increased incidence diseases, hitherto designated as rare. Brain related ischemia, at birth, or later in 27 life, during, for example stroke, is increasing in global prevalence. Reactive microglia can contribute to 28 neuronal damage as well as compromising transplantion. One potential treatment strategy is cellular 29 therapy, using mesenchymal stem cells (hMSCs), which possess immunomodulatory and cell repair prop- 30 erties. For effective clinical therapy, mechanisms of action must be understood better. Here multicentre 31 international laboratories assessed this question together investigating application of hMSCs neural 32 involvement, with interest in the role of reactive microglia. Modulation by hMSCs in our in vivo and in 33 vitro study shows they decrease markers of microglial activation (lower ED1 and Iba) and astrogliosis 34 (lower GFAP) following transplantation in an ouabain-induced brain ischemia rat model and in organo- 35 typic hippocampal cultures. The anti-inflammatory effect in vitro was demonstrated to be CD200 ligand 36 dependent with ligand expression shown to be increased by IL-4 stimulation. hMSC transplant reduced 37 ratmicroglial STAT3 gene expression and reduced activation of Y705 phosphorylated STAT3, but STAT3 in 38 the hMSCs themselves was elevated upon grafting. Surprisingly, activity was dependent on heterodimer- 39 isation with STAT1 activated by IL-4 and Oncostatin M. Our study paves the way to preclinical stages of a 40 clinical trial with hMSC, and suggests a non-canonical JAK-STAT signaling of unphosphorylated STAT3 in 41 immunomodulatory effects of hMSCs. ; PUBLISHED ; The overall consortium was funded by the Novus Sanguis fund, jointly created by McGuckin, Forraz and Fondation LeJeune (Paris), to whom we thank. The work was also supported by grant Sonderf- orschungsbereich (SFB F28) of the Austrian Science Foundation (FWF) to Richard Moriggl. Lukas Kenner was also supported by Fonds zur Förderung der wissenschaftlichen Forschung (P-18478- B12) and Genome Research-Austria project ‘‘Inflammobiota’’. We are particularly grateful to obstetrics and gynaecology staff of Hopital St. Joseph-St. Luc., Lyon, France; Hopital Natecia, Lyon, (France) for essential collection and supply of human clinical sam- ples for this research study.