Mesenchymal stem/progenitor cells (MSCs) improve functional outcome in a number of disease models through suppression of inflammation. However, their effects on neuroinflammation are unknown. In this study, we show that MSCs suppress endotoxin-induced glial activation in organotypic hippocampal slice cultures (OHSCs). Lipopolysaccharide-stimulated OHSCs activated MSCs to increase the expression of cyclo-oxygenase-2 and produce prostaglandin E2. MSC-derived prostaglandin E2, then suppressed pro-inflammatory cytokine production by the OHSCs. Together, the results suggest the potential anti-inflammatory mechanism of MSCs in models of disease and support earlier observations that MSCs may offer a therapy for neuroinflammation produced by trauma or disease.