A major goal of immunotherapy remains the control of pathogenic T cell responses that drive autoimmunity and allograft rejection. Adherent progenitor cells, including mesenchymal stromal cells (MSCs) and multipotent adult progenitor cells (MAPCs), represent attractive immunomodulatory cell therapy candidates currently active in clinical trials. MAPCs can be distinguished from MSCs on the basis of cellular phenotype, size, transcriptional profile, and expansion capacity. However, despite their ongoing evaluation in autoimmune and allogeneic solid organ transplantation settings, data supporting the immune regulatory potential of clinical-grade MAPCs are limited. In this study, we used allogeneic islet transplantation as a model indication to assess the ability of clinical-grade MAPCs to control T cell responses that drive immunopathology in human autoimmune disease and allograft rejection. MAPCs suppressed T cell proliferation and Th1 and Th17 cytokine production while increasing secretion of IL-10 and were able to suppress effector functions of bona fide autoreactive T cells from individuals with type 1 diabetes mellitus, including killing of human islets. Furthermore, MAPCs favored the proliferation of regulatory T cells during homeostatic expansion driven by γ-chain cytokines and exerted a durable, yet reversible, control of T cell function. MAPC suppression required licensing and proceeded via IDO-mediated tryptophan catabolism. Therefore, the common immune modulatory characteristics of clinical-grade MAPCs shown in this study suggest that they can be regarded as an alternative source of adult progenitor cells with similar clinical usefulness to MSCs. Taken collectively, these findings may guide the successful deployment of both MSCs and MAPCs for the amelioration of human autoimmunity and allograft rejection.