Background: Although mesenchymal stem cells (MSCs) might offer a promising strategy for treating SLE, their immunoregulatory plasticity makes their therapeutic effects unpredictable. Whether overexpressing IL-37, an IL-1 family member with immunosuppressive activity, might enhance the therapeutic effects of these cells for SLE is unknown. Methods: We genetically modified MSCs to overexpress IL-37 and assessed their effects on immune suppression in vitro. We also evaluated the effects of such cells versus effects of various controls after transplanting them into MRL/lpr mice (model of SLE). Results: Stem cell characteristics did not appear altered in MSCs overexpressing IL-37. These cells had enhanced immunosuppression in vitro in terms of inhibiting splenocyte proliferation, reducing proinflammatory factors (IL-1β, TNF-α, IL-17, and IL-6), and suppressing autoantibodies (anti-dsDNA and anti-ANA). Compared with animals receiving control MSCs or IL-37 treatment alone, MRL/lpr mice transplanted with IL-37-overexpressing cells displayed improved survival and reduced signs of SLE (indicated by urine protein levels, spleen weight, and renal pathologic scores); they also had significantly lower expression of proinflammatory factors, lower total antibody levels in serum and urine, lower autoantibody production, and showed reduced T cell numbers in the serum and kidney. Expression of IL-37 by MSCs can maintain higher serum levels of IL-37, and MSCs had prolonged survival after transplantation, perhaps through IL-37 suppressing the inflammatory microenvironment. Conclusions: Mutually reinforcing interaction between MSCs and IL-37 appears to underlie their additive therapeutic effects. Genetic modification to overexpress IL-37 might offer a way to enhance the stability and effectiveness of MSCs in treating SLE.Keywords: IL-37; MSCs; SLE; interleukin-37; mesenchymal stem cells; systemic lupus erythematosus.