The potent immune regulatory capacity of mesenchymal stromal cells (MSC) has been extensively characterised in terms of T cells, natural killer cells and dendritic cells suppression; however the ability of MSC to modulate B cell biology is not fully understood. This immune suppressive ability has led to the development of MSC therapy for the treatment of inflammatory and auto-immune disease, and has already demonstrated beneficial effects during GvHD and Crohn’s disease. However, the mechanisms employed by MSC therapy to modulate disease progression have not been identified. The key goals for this thesis were (1) to determine how MSC effect B cell function and to identify the mechanisms by which this effect is mediated, and (2) the development of novel mouse models of chronic and acute GvHD to elucidate the mechanism of action by which MSC attenuate disease progression. This study demonstrated than MSC support the activation, proliferation and survival of human CD19+ peripheral B cells in vitro. MSC support of B cell survival was mediated through the cell contact dependent up-regulation of VEGF production by the MSC. Soluble VEGF bound by B cells induced AKT phosphorylation, inhibited caspase 3 cleavage and reduced apoptosis. The second part of this thesis focused on developing murine models of chronic and acute GvHD and to investigate the efficacy of xenogeneic MSC therapy in these models. In addition, a robust humanised model of aGvHD was developed to investigate mechanism of MSC protection. MSC therapy significantly increased survival of aGvHD mice and this protection correlated with significantly reduced TNF-α production and significantly increased numbers of regulatory T cells in aGvHD target organs. These findings further the understanding of the immune regulation capacity of MSC in vitro and provide a robust and clinically relevant model of aGvHD from which the mechanisms behind MSC modulation can be investigated.