Mesenchymal stem cell (MSC) therapy has shown promise clinically in graft-versus-host disease and in preclinical animal models of T helper type 1 (Th1)-driven autoimmune diseases, but whether MSCs can be used to treat autoimmune disease in general is unclear. Here, the therapeutic potential of MSCs was tested in the New Zealand black (NZB)xNew Zealand white (NZW) F1 (NZB/W) lupus mouse model. The pathogenesis of systemic lupus erythematosus involves abnormal B and T cell activation leading to autoantibody formation. To test whether the immunomodulatory activity of MSCs would inhibit the development of autoimmune responses and provide a therapeutic benefit, NZB/W mice were treated with Balb/c-derived allogeneic MSCs starting before or after disease onset. Systemic MSC administration worsened disease and enhanced anti-double-stranded DNA (dsDNA) autoantibody production. The increase in autoantibody titres was accompanied by an increase in plasma cells in the bone marrow, an increase in glomerular immune complex deposition, more severe kidney pathology, and greater proteinuria. Co-culturing MSCs with plasma cells purified from NZB/W mice led to an increase in immunoglobulin G antibody production, suggesting that MSCs might be augmenting plasma cell survival and function in MSC-treated animals. Our results suggest that MSC therapy may not be beneficial in Th2-type T cell- and B cell-driven diseases such as lupus and highlight the need to understand further the appropriate application of MSC therapy.