The molecular mechanisms that regulate the immune function of bone marrow-derived mesenchymal stem cells (BMSCs) are not known. We have shown previously that freshly isolated BMSCs when induced to express neuronal stem cell markers lose immunoregulatory function when transferred into mice sensitized to develop experimental autoimmune encephalomyelitis. Recently, microRNAs (miRs) have been shown to be involved in the regulation of several immune responses in both innate and acquired immunity. We now show that among several differentially expressed miRs, miR-146a was strongly upregulated in neuronally differentiated when compared with miR-146a expression in freshly isolated BMSCs or control BMSCs cultured in parallel but in nondifferentiating medium. Inhibition of miR-146a with a selective antagomir restored the immunoregulatory activity of nBMSCs. We mapped miR-146a to its multiple predicted target mRNA transcripts and found that miR-146a was predicted to block PGE2 synthase (ptges-2). We then showed that Ptges-2 was directly targeted by miR-146a using a luciferase reporter assay. Furthermore, increased expression of miR-146a in BMSCs correlated with inhibition of PGE synthase-2 and inhibition of PGE2 release. Accordingly, inhibition of miR-146a restored synthesis of PGE2. These data support the conclusion that miR-146a plays a critical role in the control of the immunoregulatory potential of BMSCs.