The immunomodulatory ability of mesenchymal stromal cells (MSC) make them an ideal cellular therapy for inflammatory diseases such as acute Graft versus Host Disease (aGvHD). Cyclosporine (CsA) is an immunosuppressive drug commonly used as prophylaxis and treatment of aGvHD. However, oral bioavailability of CsA is suboptimal. The elucidation of MSC and CsA interactions will be beneficial as aGvHD patients in clinics would have undergone prophylaxis involving CsA immunosuppression and MSC may be administered alongside CsA therapy. The key goals of this thesis were to (1) investigate the direct interactions of MSC and CsA and elucidate the mechanisms by which these interactions occur in vitro and in vivo, and (2) establish the efficacy of a novel and more clinically applicable CsA treatment, by means of optimal targeted delivery, in a humanised model of aGvHD. This study has defined the direct interactions of MSC and CsA, identifying MSC activation and timing of CsA as being crucial for beneficial immunosuppressive functions. We proposed a mechanism by which CsA regulated IFNγ signalling in MSC through suppressor of cytokine signaling 1 (SOCS1) inhibition resulting in the enhancement of MSCγ suppression of CD3+ T cells and increased indoleamine 2,3-deoxygenase (IDO). For the first time, we have shown that a novel CsA formulation, SmPill® provided safe and superior efficacy in comparison to routinely used CsA drugs, Neoral® and Sandimmune® IV in a humanised model of aGvHD. We have shown this enhanced efficacy using pre-clinical survival studies, histopathology and cytokine analysis and hypothesise that this enhancement over these conventional CsA drugs is mediated through targeted delivery to systemic and GI tissues. Therefore, making it a highly attractive candidate for routine clinical use for aGvHD treatment. Moreover, we have investigated the interactions of MSC with SmPill® and Sandimmune® IV in a humanised model of aGvHD. We have shown that 1) CsA therapies did not impair MSC efficacy in aGvHD 2) Sandimmune® IV can be efficacious with both resting and licensed MSC therapy and 3) MSC but not MSCγ hamper SmPill® efficacy. Overall, this thesis has furthered our knowledge of MSC interactions with CsA in vitro and in vivo and presented translational pre-clinical results demonstrating the efficacy of a novel CsA formulation alone and in combination with MSC therapy for aGvHD.