Mesenchymal stromal cells (MSC) possess immunosuppressive properties, yet when treated with IFN-gamma they acquire APC functions. To gain insight into MSC immune plasticity, we explored signaling pathways induced by IFN-gamma required for MHC class II (MHC II)-dependent Ag presentation. IFN-gamma-induced MHC II expression in mouse MSC was enhanced by high cell density or serum deprivation and suppressed by TGF-beta. This process was regulated by the activity of the type IV CIITA promoter independently of STAT1 activation and the induction of the IFN regulatory factor 1-dependent B7H1/PD-L1 encoding gene. The absence of direct correlation with the cell cycle suggested that cellular connectivity modulates IFN-gamma responsiveness for MHC II expression in mouse MSC. TGF-beta signaling in mouse MSC involved ALK5 and ALK1 TGF-beta RI, leading to the phosphorylation of Smad2/Smad3 and Smad1/Smad5/Smad8. An opposite effect was observed in human MSC where IFN-gamma-induced MHC II expression occurred at the highest levels in low-density cultures; however, TGF-beta reduced IFN-gamma-induced MHC II expression and its signaling was similar as in mouse MSC. This suggests that the IFN-gamma-induced APC features of MSC can be modulated by TGF-beta, serum factors, and cell density in vitro, although not in the same way in mouse and human MSC, via their convergent effects on CIITA expression.