Graft-versus-host disease (GVHD) is a life-threatening complication following an allogeneic tissue transplant. Immune cells (white blood cells) in the tissue (the graft) recognise the recipient (the host) as “foreign”. The transplanted immune cells then attack the host’s body cells. Steroids are the first-line treatment for established GVHD and have a response rate of 30-50%. However, the outcome for patients with severe, steroid-resistant acute GVHD is poor, and overall survival is low. The development of GVHD is mainly mediated by T-cells, and Mesenchymal Stem Cells (MSCs) can inhibit T-cell function. MSCs down-regulate the responses of T-cell functions, attenuate T-cell production of IL-2, which results in decreased formation of cytotoxic T-cells and directly inhibits NK cell production and cytotoxic activity. MSCs can arrest T-cell division. MSCs inhibit the production of antibodies, which makes MSCs useful for treating other autoimmune diseases as well. Thus, there is sufficient evidence to support the use of MSCs in the prevention and treatment of GVHD. Furthermore, a number of patient had treated with MSCs have been reported, and the results have been promising to date.