The aim of this body of work was to determine the method of action of mesenchymal stromal cell immunomodulation, and their potential benefits in treating pulmonary fibrosis. This was achieved through a series of in vitro studies and an in vivo model of lung disease, namely, bleomycin induced pulmonary fibrosis. Firstly MSC expansion of Treg cells was shown to be dependent on Jagged 1 signalling. MSC inhibition of DC maturation and antigen presentation was shown to also involve Jagged 1 however IL-6 signalling is also necessary. MSC inhibition of DC maturation resulted in a semi mature or “tolerogenic” DC, expressing lower levels of co-stimulatory markers. These cells were capable of suppressing antigen specific T cell proliferation and inducing Treg cells from a naive population. MSC trophic factors were further examined for their ability to promote wound healing. MSC conditioned media cultured with lung epithelial cells encouraged proliferation through the release of the growth factor HGF. MSC CM also reduced the proliferation and activation of primary lung fibroblasts, yet encouraged their migration. These results suggest MSC do not hinder the body’s natural wound healing efforts but prevents unsolicited fibroblast activity and encourages epithelial growth and repair. The positive effects of MSC treatment were further examined in vivo, where MSC were shown to improve pathology in a bleomycin driven model of lung fibrosis. The bleomycin model was examined and refined in order to more accurately represent therapeutic intervention, allowing for investigation of MSC as an anti-fibrotic cell therapy.