The potential therapeutic value of cell-based therapy with mesenchymal stem cells (MSC) has been reported in mouse models of polymicrobial peritoneal sepsis. However, the mechanisms responsible for the beneficial effects of MSC have not been well defined. Therefore, we tested the therapeutic effect of intravenous bone marrow-derived human MSC in peritoneal sepsis induced by gram-negative bacteria. At 48 h, survival was significantly increased in mice treated with intravenous MSC compared with control mice treated with intravenous fibroblasts (3T3) or intravenous PBS. There were no significant differences in the levels of TNF-α, macrophage inflammatory protein 2, or IL-10 in the plasma. However, there was a marked reduction in the number of bacterial colony-forming units of Pseudomonas aeruginosa in the blood of MSC-treated mice compared with the 3T3 and PBS control groups. In addition, phagocytic activity was increased in blood monocytes isolated from mice treated with MSC compared with the 3T3 and PBS groups. Furthermore, levels of C5a anaphylotoxin were elevated in the blood of mice treated with MSC, a finding that was associated with upregulation of the phagocytosis receptor CD11b on monocytes. The phagocytic activity of neutrophils was not different among the groups. There was also an increase in alternately activated monocytes/macrophages (CD163- and CD206-positive) in the spleen of the MSC-treated mice compared with the two controls. Thus intravenous MSC increased survival from gram-negative peritoneal sepsis, in part by a monocyte-dependent increase in bacterial phagocytosis.