Background and Objectives: The immunomodulatory potential of mesenchymal stem cells (MSCs) can be regulated by a variety of molecules, especially cytokines. The inflammatory cytokine, TNF-like ligand 1A (TL1A), has been reported as an inflammation stimulator in-multiple autoimmune diseases. Here, we studied the effects of TL1A/TNF-receptor 2 (TNFR2) pathway on the therapeutic potency of bone marrow-derived MSCs (BMSCs). Methods: and Results: BMSCs, fibroblast-like synoviocytes (FLSs), and H9 and jurkat human T lymphocytes were used in this study. BMSCs paracrine activities, differentiation, proliferation, and migration were investigated after stimulation with TL1A, and intervened with anti-TNFR2. Additionally, the effects of TL1A on BMSCs therapeutic potency were evaluated by treating RA-FLSs, and H9 and jurkat T cells with TL1A-stimulated BMSCs conditioned medium (CM). Indian hedgehog (IHH) involvement was determined by gene silencing and treatment by recombinant IHH (rIHH). TL1A induced BMSCs stemness-related genes, COX-2, IL-6, IDO, TGF-β and HGF through TNFR2. Also, TL1A corrected biased differentiation and increased proliferation, and migration through TNFR2. Meanwhile, CM of TL1A-stimulated BMSCs decreased the inflammatory markers of RA-FLSs and T cells. Moreover, TL1A-stimulated BMSCs experienced IHH up-regulation coupled with NF-κB and STAT3 signaling up-regulation, while p53 and oxidative stress were down-regulated. Furthermore, treatment of BMSCs by rIHH increased their anti-inflammatory effects.More importantly, knockdown of IHH decreased the ability of TL1A-stimulated BMSCs to alleviating the inflammation in RA-FLSs and T cells. Conclusions This study reports the effects of TL1A/TNFR2 pathway on the biological behaviors and therapeutic potency of BMSCs through IHH. These findings could introduce novel procedures to increase the stemness of MSCs in cellular therapy.