Immediately after a medical device or material is implanted into living tissue, the body reacts in a well coordinated response that involves protein adsorption, cellular recruitment, soluble factor production and matrix synthesis. One of the key cell types in this process is the macrophage, which invades the site shortly after implantation. Macrophages release numerous pro- and anti-inflammatory cytokines as part of their normal role in regulating inflammation. However, in the case of implanted materials, macrophages create a chronically inflamed environment at the implant site by expressing elevated levels of pro-inflammatory cytokines, including TNF-α and IL-6. The aim of this study is to evaluate the expression of TNF-α and IL-6 by LPS-stimulated macrophages in the presence of encapsulated mesenchymal stem cells (MSCs). Human MSCs (hMSCs) were encapsulated in hollow fiber membranes (HFMs) and introduced into cultures of IC-21 macrophages grown in lipopolysaccahride (LPS) conditioned media. IC-21s grown alone in either unconditioned or conditioned media served as controls. HFMs containing only collagen were introduced to additional LPS-conditioned cultures as an additional control. Media was sampled after 24 and 48 hours. The samples were analyzed using Cytometric Bead Assay (CBA) for concentrations of TNF-α and IL-6. In the presence of encapsulated hMSCs, IC-21 macrophages expressed significantly lower concentrations of TNF-α after 24 hours (630.9 pg/ml, SEM=88.9) and 48 hours (128.5 pg/ml, SEM=36.1) in comparison to concentrations expressed in cultures without the presence encapsulated hMSCs. Similarly, IC-21s expressed significantly lower concentrations of IL-6 in the presence of encapsulated hMSCs after 24 hours (41.6 pg/ml, SEM=7.6) and 48 hours (18.4 pg/ml, SEM=3.7). Encapsulated MSCs demonstrate the ability to reduce the expression of TNF-α and IL-6 in macrophages. This outcome holds the potential to develop the use of encapsulated MSCs in mitigating the inflammatory response to implants.