Human placenta-derived mononuclear cells (MNC) were isolated by a Percoll density gradient and cultured in mesenchymal stem cell (MSC) maintenance medium. The homogenous layer of adherent cells exhibited a typical fibroblast-like morphology, a large expansive potential, and cell cycle characteristics including a subset of quiescent cells. In vitro differentiation assays showed the tripotential differentiation capacity of these cells toward adipogenic, osteogenic and chondrogenic lineages. Flow cytometry analyses and immunocytochemistry stain showed that placental MSC was a homogeneous cell population devoid of hematopoietic cells, which uniformly expressed CD29, CD44, CD73, CD105, CD166, laminin, fibronectin and vimentin while being negative for expression of CD31, CD34, CD45 and alpha-smooth muscle actin. Most importantly, immuno-phenotypic analyses demonstrated that these cells expressed class I major histocompatibility complex (MHC-I), but they did not express MHC-II molecules. Additionally these cells could suppress umbilical cord blood (UCB) lymphocytes proliferation induced by cellular or nonspecific mitogenic stimuli. This strongly implies that they may have potential application in allograft transplantation. Since placenta and UCB are homogeneous, the MSC derived from human placenta can be transplanted combined with hematopoietic stem cells (HSC) from UCB to reduce the potential graft-versus-host disease (GVHD) in recipients.