Umbilical cord tissue represents a unique source of cells with potential for cell therapy applications for multiple diseases. Human umbilical tissue-derived cells (hUTC) are a developmentally early stage, homogenous population of cells that are HLA-ABC dim, HLA-DR negative, and lack expression of co-stimulatory molecules in the unactivated state. The lack of HLA-DR and co-stimulatory molecule expression on unactivated hUTC may account for their reduced immunogenicity, facilitating their use in allogeneic settings. However, such approaches could be confounded by host innate cells such as natural killer (NK) cells. Here, we evaluate in vitro NK cell interactions with hUTC and compare them with human mesenchymal stem cells (MSC). Our investigations show that hUTC suppress NK activation, through prostaglandin-E2 secretion in a contact-independent manner. Prestimulation of hUTC or human MSC with interferon gamma (IFN-g) induced expression of the tryptophan degrading enzyme indoleamine 2, 3 dioxygenase, facilitating enhanced suppression. However, resting NK cells of different killer immunoglobulin-like receptor haplotypes did not kill hUTC or MSC; only activated NK cells had the ability to kill nonstimulated hUTC and, to a lesser extent, MSC. The cell killing process involved signaling through the NKG2D receptor and the perforin/granzyme pathway; this was supported by CD54 (ICAM-1) expression by hUTC. IFN-g-stimulated hUTC or hMSC were less susceptible to NK killing; in this case, protection was associated with elevated HLA-ABC expression. These data delineate the different mechanisms in a two-way interaction between NK cells and two distinct cell therapies, hUTC or hMSC, and how these interactions may influence their clinical applications.