Abstract: Recently, intra-articular injections of mesenchymal stem cells (MSCs) have been used as a treatment for early osteoarthritis (OA) due to the known immunomodulatory effects of these cells. However, MSC therapy has shown variable clinical outcomes. This variability in efficacy likely reflects the interplay of a range of factors, which influence MSC immunoregulatory capacity. In particular, joint inflammatory state may impact MSC treatment efficacy due to the known dependence of the anti-inflammatory MSC phenotype on the levels of pro-inflammatory cytokines in the surrounding environment. To gain insight into the potential role of joint inflammatory state on MSC immunomodulatory effects, we first expanded a previously validated 3D in vitro model of OA to allow for tunable inflammatory conditions. We then utilized our expanded in vitro OA model to assess the therapeutic potential of MSCs in “high” (high-OA) versus “low” (low-OA) inflammatory contexts. The addition of MSCs to high-OA conditions stimulated significantly lower production of IL-1β, IFN-γ, MMP-9, and MMP-13 by osteoarthritic chondrocytes (OACs) and reduced macrophage activation. In contrast, the addition of MSCs to low-OA conditions increased OAC expression of OA-related markers IL-6 and IL-8 and induced a wound healing-like phenotype in macrophages. In addition to these results, we also assessed if MSCs primed with pro-inflammatory factors IFN-γ and TNF-α could improve MSC treatment efficacy in low-OA conditions. No improvements in MSC anti-inflammatory effects were observed for low-OA after priming. These findings suggest a key role for the inflammatory environment and MSC “activation” state in determining MSC immunomodulatory effects. If further validated, this knowledge could potentially be used to tailor the phenotype of injected MSCs to improve clinical outcomes. Lay Summary: The inflammatory environment surrounding joint tissues is believed to underlie OA pathogenesis and may therefore hold a key to treatment. This work developed a system with control of inflammatory levels to assess OA therapies outside of living organisms. We then used this system to help study the therapeutic potential of mesenchymal stem cells (MSCs), an emergent yet controversial OA treatment. Our results suggest that MSC efficacy is context-dependent and sheds light on some of the specifics of these contexts. If further validated, this knowledge could potentially be used to screen patients and/or tailor the injected MSCs, improving clinical outcomes. Description of Future Work: Future work will be focused on the further development and validation of this model system towards its use as a discovery/development tool for OA therapies. © 2019, The Regenerative Engineering Society.