Mesenchymal stromal cells (MSCs) function as a formidable regulator of inflammation and tissue homeostasis and expanded MSCs are shown to be effective in treating various inflammatory diseases. Their therapeutic effects require the existence of certain inflammatory cytokines. However, in the absence of sufficient proinflammatory stimuli or in the presence of anti-inflammatory medications, MSCs are animated to promote immune responses and unable to alleviate inflammatory disorders. In this study, it is demonstrated that steroid co-administration interferes the efficacy of MSCs in treating acute graft-versus-host disease (aGvHD). Molecular analysis reveals that vascular endothelial growth factor C (VEGF-C) is highly induced in MSCs by steroids and TNF alpha and VEGF-C in turn promotes CD8(+) T cell response. This immune promoting effect is abolished by blockade or specific genetic ablation of VEGFR3 in CD8(+) T cells. Additionally, administration of VEGF-C alone exacerbates aGvHD progression through eliciting more vigorous CD8(+) T cell activation and proliferation. Further studies demonstrate that VEGF-C augments the PI3K/AKT signaling process and the expression of downstream genes, such as Cyclin D1. Thus, the data demonstrate that steroids can reverse the immunosuppressive effect of MSCs via promoting VEGF-C-augmented CD8(+) T cell response and provide novel information for designing efficacious MSC-based therapies.