Clinical trials using allogeneic mesenchymal stem cells (MSCs) are ongoing for the purpose of providing therapeutic benefit for a variety of human disorders. Pertinent to their clinical use are the accessibility to sufficient quantities of these cells allowing for repetitive administration, as well as a better understanding of the specific mechanisms by which allogeneic MSCs evade host immune responses that in turn influence their life span following administration. In this report, we sought to characterize and compare human peripheral blood MSCs (hPB-MSCs) with bone marrow-derived MSCs. hPB-MSCs met the established criteria to characterize this cellular lineage, including capacity for self-renewal, differentiation into tissues of mesodermal origin, and expression of phenotypic surface markers. In addition, hPB-MSCs suppressed alloreactive proliferation as well as the production of proinflammatory cytokines. Examination of the mechanisms by which allogeneic MSCs evade the host immune response, which is crucial for their therapeutic use, demonstrated that constitutive expression of serine protease inhibitor 9 (PI-9) on hPB-MSCs and bone marrow-derived MSCs is a major defense mechanism against granzyme B-mediated destruction by NK cells. Similarly, MSCs treated with small interfering RNA for PI-9 increased MSC cellular death, whereas expression of transgenic PI-9 following retroviral transduction protected MSCs. These data significantly advance our understanding of the immunomodulatory role for hPB-MSCs as well as the mechanisms by which they evade host immune responses. These findings contribute to the development of MSC-based therapies for diseases.