Background: Mesenchymal stromal cells have therapeutic potential in sepsis, but the mechanism of action is unclear. We tested the effects, dose-response, and mechanisms of action of cryopreserved, xenogeneic-free human umbilical cord mesenchymal stromal cells in a rat model of fecal peritonitis, and examined the role of heme oxygenase-1 in protection. Methods: Separate in vivo experiments evaluated mesenchymal stromal cells in fecal sepsis, established dose response (2, 5, and 10 million cells/kg), and the role of heme oxygenase-1 in mediating human umbilical cord-derived mesenchymal stromal/stem cell effects. Ex vivo studies utilized pharmacologic blockers and small inhibitory RNAs to evaluate mechanisms of mesenchymal stromal cell enhanced function in (rodent, healthy and septic human) macrophages. Results: Human umbilical cord mesenchymal stromal cells reduced injury and increased survival (from 48%, 12 of 25 to 88%, 14 of 16, P = 0.0033) in fecal sepsis, with dose response studies demonstrating that 10 million cells/kg was the most effective dose. Mesenchymal stromal cells reduced bacterial load and peritoneal leukocyte infiltration (from 9.9 +/- 3.1 x 10(6)/ml to 6.2 +/- 1.8 x 10(6)/ml, N = 8 to 10 per group, P < 0.0001), and increased heme oxygenase-1 expression in peritoneal macrophages, liver, and spleen. Heme oxygenase-1 blockade abolished the effects of mesenchymal stromal cells (N = 7 or 8 per group). Mesenchymal stromal cells also increased heme oxygenase-1 expression in macrophages from healthy donors and septic patients. Direct ex vivo upregulation of macrophage heme oxygenase-1 enhanced macrophage function (phagocytosis, reactive oxygen species production, bacterial killing). Blockade of lipoxin A4 production in mesenchymal stromal cells, and of prostaglandin E2 synthesis in mesenchymal stromal cell/macrophage cocultures, prevented upregulation of heme oxygenase-1 in macrophages (from 9.6 +/- 5.5-fold to 2.3 +/- 1.3 and 2.4 +/- 2.3 respectively, P = 0.004). Knockdown of heme oxygenase-1 production in macrophages ablated mesenchymal stromal cell enhancement of macrophage phagocytosis. Conclusions: Human umbilical cord mesenchymal stromal cells attenuate systemic sepsis by enhancing peritoneal macrophage bacterial killing, mediated partly via upregulation of peritoneal macrophage heme oxygenase-1. Lipoxin A4 and prostaglandin E2 play key roles in the mesenchymal stromal cell and macrophage interaction.