Mesenchymal stem cells (MSCs) have been shown to support breast cancer growth. Because MSCs also increase the frequency of regulatory T cells (T regs), this study tested the hypothesis that human MSCs, via Tregs, protect breast cancer cells (BCCs) from immune clearance MSCs suppressed the proliferation of PBMCs when the latter were exposed to gamma-irradiated BCCs. Similarly, MSCs showed significant inhibition of PBMC migration toward BCCs and a corresponding decrease in CXCL12. MSCs also inhibited NK cell and CTL functions, which correlated with reduced numbers of CD8+ and CD56+ cells compared with parallel cultures without MSCs. The reduced NK and CTL activities correlated with a decrease in intracellular and secreted granzyme B. To explain these immunosuppressive findings, we compared T reg levels after coculture with MSCs and found an∼ 2-fold increase in T regs, with associated decreases in antitumor Th1 cytokines and increases in Th2 cytokines. MSC-derived TGF-β1 was largely responsible for the increase in T regs based on knockdown studies. In the presence of T reg depletion, PBMC proliferation and effector functions were partially restored. Together, these studies show an MSC-mediated increase in T regs in cocultures of PBMCs and BCCs. The results could be explained, in part, by the increase in Th2-type cytokines and MSC-generated TGF-β1. These findings demonstrate immune protection by MSCs to BCCs. The reduction in immune cell proliferation and recruitment mediated by MSCs has implications for treatment of breast cancer with chemotherapy.