Mesenchymal stem cells (MSCs) have been studied as novel therapeutic agents because of their immunomodulatory properties in inflammatory diseases. The suppressor of cytokine signaling (SOCS) proteins are key regulators of the immune response and macrophage modulation. In the present study, we hypothesized that SOCS in MCSs might mediate macrophage modulation and tested this in a bacteria-induced acute lung injury (ALI) mouse model. The macrophage phenotype was observed in RAW264.7 alveolar macrophages exposed to lipopolysaccharide (LPS) in an in vitro model, and in the ALI mouse model induced by tracheal administration ofEscherichia coli(1 × 107CFU in 0.05mL PBS). In LPS-exposed RAW264.7 cells, the levels of markers of M1 macrophages, such as CD86 and pro-inflammatory cytokines (IL-1α, IL-1β, IL-6 and TNF-α), significantly increased, but they significantly reduced after MSC treatment. Meanwhile, the levels of markers of M2 macrophages, such as CD204 and anti-inflammatory cytokines (IL-4 and IL-10), increased after LPS exposure, and further significantly increased after MSC treatment. This regulatory effect of MSCs on M1/M2 macrophage polarization was significantly abolished by SOCS3 inhibition. In theE.coli-induced ALI model, tissue injury and inflammation in the mouse lung were significantly attenuated by the transplantation of MSCs, but not by SOCS3-inhibited MSCs. The regulatory effect of MSCs on M1/M2 macrophage polarization was observed in the lung injury model but was significantly abolished by SOCS3 inhibition. Taken together, our findings suggest that SOCS3 is an important mediator for macrophage modulation in anti-inflammatory properties of MSCs.