Investigations into cell therapies for application in organ transplantation have grown. Here, we describe the ex vivo generation of donor bone marrow-derived dendritic cells (BMDCs) and glucocorticoid-treated BMDCs with potent immunomodulatory properties for application in allogeneic transplantation. BMDCs were treated with dexamethasone (Dexa) to induce an immature, maturation-resistant phenotype. BMDC and Dexa BMDC phenotype, antigen presenting cell function, and immunomodulatory properties were fully characterized. Both populations display significant immunomodulatory properties, including, but not limited to, a significant increase in mRNA expression of programmed death-ligand 1 and indoleamine 2,3-dioxygenase. BMDCs and Dexa BMDCs display a profound impaired capacity to stimulate allogeneic lymphocytes. Moreover, in a fully MHC I/II mismatched rat corneal transplantation model, injection of donor-derived, untreated BMDC or Dexa BMDCs (1 × 10(6) cells, day -7) significantly prolonged corneal allograft survival without the need for additional immunosuppression. Although neovascularization was not reduced and evidence of donor-specific alloantibody response was detected, a significant reduction in allograft cellular infiltration combined with a significant increase in the ratio of intragraft FoxP3-expressing regulatory cells was observed. Our comprehensive analysis demonstrates the novel cellular therapeutic approach and significant effect of donor-derived, untreated BMDCs and Dexa BMDCs in preventing corneal allograft rejection.