BACKGROUND: Although both pre-clinical and clinical studies show promising outcomes, resulting in rapid growth of clinical trials of MSC-based therapies in recent years, the heterogeneity and therapeutic inconsistency of MSCs have severely hampered their clinical applications. Purifying homogenous MSC populations with enhanced specific functions represents one promising approach. We have demonstrated recently that the CD317(+) MSCs have enhanced anti-inflammatory functions and improved therapeutic efficacy and consistency. METHODS: In the current study, we performed both in vitro and in vivo investigations to delineate whether and how CD317 regulates the immune modulation function of MSCs. RESULTS: Our data here indicate that the CD317 directly contributes to the immune suppression function of MSCs stimulated by TNF-alpha through up-regulating TSG6 via CD317/lipid-raft/TNFR1 complex. The CD317 stabilizes the TNFR1 complex, resulting in hyper-activation of the NF-kappaB pathway and up-regulation of TSG6, which confers the therapeutic effects of MSCs on the mouse model of ALI (acute lung injury) and IBD (inflammatory bowel disease). CONCLUSIONS: Thus, the CD317 stabilizes TNFR1 and confers the anti-inflammatory functions of MSCs via NF-kappaB/TSG6 Pathway.