Background: Mesenchymal stem cells (MSCs) are increasingly considered to be used as biological immunosuppressants in hematopoietic stem cell transplantation (HSCT). In the early reconstitution phase following HSCT, natural killer (NK) cells represent the major lymphocyte population in peripheral blood and display graft-vs-leukemia (GvL) effects. The functional interactions between NK cells and MSCs have the potential to influence the leukemia relapse rate after HSCT. Until date, MSC-NK cell interaction studies are largely focussed on bone marrow derived (BM)-MSCs. Umbilical cord derived (UC)-MSCs might be an alternative source of therapeutic MSCs. Thus, we studied the interaction of UC-MSCs with unstimulated allogeneic NK cells.Results: UC-MSCs could potently suppress NK cell cytotoxicity in overnight cultures via soluble factors. The main soluble immunosuppressant was identified as prostaglandin (PG)-E2. Maximal PGE2 release involved IL-1β priming of MSCs after close contact between the NK cells and UC-MSCs. Interestingly, blocking gamma-secretase activation alleviated the immunosuppression by controlling PGE2 production. IL-1 receptor activation and subsequent downstream signalling events were found to require gamma-secretase activity.Conclusion: Although the role of PGE2 in NK cell-MSC has been reported, the requirement of cell-cell contact for PGE2 induced immunosuppression remained unexplained. Our findings shed light on this puzzling observation and identify new players in the NK cell-MSC crosstalk.