Mesenchymal stem cells (MSCs) are potent immunoregulators and have shown clinical utility in suppressing immunity. MSC function is modulated by cytokines, since inflammatory cytokines, such as interferon-gamma (IFNgamma) concomitant with tumor necrosis factor-alpha (TNFalpha), induce their immunoregulatory capability. Here, we show that IFNgamma and TNFalpha act synergistically to induce high levels of expression of interleukin-6 (IL-6) and several other immune-related molecules in MSCs in vitro. We further found that, while either IFNgamma or TNFalpha alone induced minor expression of C/EBPbeta in MSCs, this transcription factor was dramatically upregulated when these cytokines were added together. A causal relationship between C/EBPbeta upregulation and IL-6 expression was demonstrated by small interfering RNA knockdown of C/EBPbeta. C/EBPbeta knockdown also inhibited the synergistic expression of CXCL1, inducible nitric oxide synthase, and CCL5 in response to concomitant IFNgamma and TNFalpha. We conclude that C/EBPbeta is a key transcription factor in synergistic gene upregulation by IFNgamma and TNFalpha. Importantly, C/EBPbeta similarly mediated synergistic gene induction in response to IFNgamma accompanied by IL-1beta or lipopolysaccharide, suggesting that synergy between IFNgamma and other stimuli share C/EBPbeta as common mechanism. Furthermore, while STAT1 is critical in IFNgamma signaling, we found that STAT1 knockdown in MSCs did not affect C/EBPbeta expression or the synergistic induction of IL-6 and CXCL1 by IFNgamma and TNFalpha. Thus, C/EBPbeta is not regulated by STAT1. These results demonstrate the importance of cytokine interactions in MSC immunobiology, a better understanding of which will allow improved clinical application of these cells.