Mesenchymal Stem Cells (MSCs) can be found in various body sites. Their main role is to differentiate into cartilage, bone, muscle, and fat cells to allow tissue maintenance and repair. During inflammation, MSCs exhibit important immunomodulatory properties that are not constitutive, but require activation, upon which they may exert immunosuppressive functions. MSCs are defined as "sensors of inflammation" since they modulate their ability of interfering with the immune system both in vitro and in vivo upon interaction with different factors. MSCs may influence immune responses through different mechanisms, such as direct cell-to-cell contact, release of soluble factors, and through the induction of anergy and apoptosis. Human MSCs are defined as plastic-adherent cells expressing specific surface molecules. Lack of MHC class II antigens makes them appealing as allogeneic tools for the therapy of both autoimmune diseases and cancer. MSC therapeutic potential could be highly enhanced by the expression of exogenous cytokines provided by transduction with viral vectors. In this review, we attempt to summarize the results of a great number of in vitro and in vivo studies aimed at improving the ability of MSCs as immunomodulators in the therapy of autoimmune, degenerative diseases and cancer. We will also compare results obtained with different vectors to deliver heterologous genes to these cells.