The goal of this project was to determine the key regulators of Mesenchymal Stromal Cell (MSC) potency as part of a cell-based therapy to treat inflammatory and autoimmune diseases. The immunomodulatory capacity of MSCs is dictated by multiple, interacting conditions that take place during the biomanufacturing of these cells, as well as after they are transplanted. Variables such as the source of MSCs and the inflammatory cues in their microenvironment are critical regulators of potency that can be manipulated and optimized prior to their use for an enhanced cell-based therapy. Herein, I took a systematic approach to isolating a single variable in the microenvironment of MSCs to determine its effect on the key immunomodulatory enzyme indoleamine 2,3-dioxygenase (IDO). I then manipulated these variables and applied them across multiple MSC donors to determine how their effect varied between cells isolated from different individuals. Finally, I conducted an in vitro potency assay with MSCs and Peripheral Blood Mononuclear Cells (PBMCs) to determine how enhanced IDO due to these variables translated to immune suppression for an enhanced cell product. Upon transplantion, different disease settings have altered microenvironments that can hinder the efficacy of an MSC therapy. The microenvironment in obesity and type 2 diabetes (T2D) has elevated levels of the fatty acid palmitate which shifts the phenotype of MSCs from immune suppressive to pro-inflammatory. I demonstrated that manipulating the microenvironment of MSCs to enhance IDO protein concentration prior to transplant reverses the pro-inflammatory effects of palmitate and restores immune suppression by MSCs. My finding was that the appropriate environmental cues, along with a potent donor, yields a cell-based therapy that can overcome challenges in many disease settings such as obesity and T2D.