Mesenchymal stem cells (MSCs) and especially those derived from fetal tissues exert a potent immunosuppressive effect that can be enhanced under inflammatory conditions. This study aimed to explore the immunosuppressive properties of human umbilical cord mesenchymal stem cells (HUCMSCs). We found that HLA-G, the nonclassical HLA allele with strong immune-inhibitory properties, was much more expressed on the HUCMSCs than on MSCs of other origins. Flow cytometry revealed that 90.8% of the HUCMSCs expressed HLA-G. RT-PCR revealed expression of HLA-G1, HLA-G5, and HLA-G7 in all of four HUCMSC lines. In a mixed lymphocyte reaction assay, the HUCMSCs inhibited the proliferation of lymphocytes by 35 ± 3% and could be reversed by treatment with an HLA-G blocking antibody. Upon coculture with the HUCMSCs, peripheral blood mononuclear cells expressed lower levels of proinflammatory mediators such as IL-6, TNF-α, and VEGF-α. This immunosuppressive effect was enhanced when the HUCMSCs were pretreated with IFN-γ, such that the expression of HLA-G was highly activated and HLA-DR diminished. The same phenomenon was not observed in MSCs derived from bone marrow or the placenta. In a xenograft rejection assay, the HUCMSCs survived in immunocompetent mice, whereas primary fibroblasts did not survive. This study confirms the HLA-G-related immunosuppressive property of HUCMSCs, which is more potent than MSCs of other origin. A good tolerance of this mesenchymal stem cell in allogeneic transplantation can thus be anticipated.