Abstract Background Immunoregulatory capacity of mesenchymal stem cells (MSC) is triggered by the inflammatory environment, which changes during tissue repair. Macrophages are essential in mediating the inflammatory response after injury and can adopt a range of functional phenotypes, exhibiting pro-inflammatory and anti-inflammatory activities. An accurate characterization of MSC activation by the inflammatory milieu is needed for improving the efficacy of regenerative therapies. In this work, we investigated the immunomodulatory functions of MSC primed with factors secreted from macrophages polarized toward a pro-inflammatory or an anti-inflammatory phenotype. We focused on the role of TNF-α and IL-10, prototypic pro-inflammatory and anti-inflammatory cytokines, respectively, as priming factors for MSC. Methods Secretion of immunoregulatory mediators from human MSC primed with media conditioned by human macrophages polarized toward a pro-inflammatory or an anti-inflammatory phenotype was determined. Immunomodulatory potential of primed MSC on polarized macrophages was studied using indirect co-cultures. Involvement of TNF-α and IL-10 in priming MSC and of PGE2 in MSC-mediated immunomodulation was investigated employing neutralizing antibodies. Collagen hydrogels were used to study MSC and macrophages interactions in a more physiological environment. Results Priming MSC with media conditioned by pro-inflammatory or anti-inflammatory macrophages enhanced their immunomodulatory potential through increased PGE2 secretion. We identified the pro-inflammatory cytokine TNF-α as a priming factor for MSC. Notably, the anti-inflammatory IL-10, mainly produced by pro-resolving macrophages, potentiated the priming effect of TNF-α. Collagen hydrogels acted as instructive microenvironments for MSC and macrophages functions and their crosstalk. Culturing macrophages on hydrogels stimulated anti-inflammatory versus pro-inflammatory cytokine secretion. Encapsulation of MSC within hydrogels increased PGE2 secretion and potentiated immunomodulation on macrophages, attenuating macrophage pro-inflammatory state and sustaining anti-inflammatory activation. Priming with inflammatory factors conferred to MSC loaded in hydrogels greater immunomodulatory potential, promoting anti-inflammatory activity of macrophages. Conclusions Factors secreted by pro-inflammatory and anti-inflammatory macrophages activated the immunomodulatory potential of MSC. This was partially attributed to the priming effect of TNF-α and IL-10. Immunoregulatory functions of primed MSC were enhanced after encapsulation in hydrogels. These findings may provide insight into novel strategies to enhance MSC immunoregulatory potency.