Multipotent mesenchymal stromal cells (MSCs) have emerged as potent therapeutic agents for multiple indications. However, recent evidence indicates that MSC function is compromised in the physiological post-injury milieu. In this study, bone marrow (BM)- and adipose-derived (AD)-MSCs were preconditioned in hypoxia with or without inflammatory mediators to potentiate their immunotherapeutic function in preparation for in vivo delivery. Human MSCs were cultured for 48 h in either normoxia (21% O2) or hypoxia (2% O2) with or without the addition of Cytomix, thus creating 4 groups: (1) normoxia (21%); (2) Cytomix-normoxia (+21%); (3) hypoxia (2%); and (4) Cytomix-hypoxia (+2%). The 4 MSC groups were subjected to comprehensive evaluation of their characteristics and function. Preconditioning did not alter common MSC surface markers; nonetheless, Cytomix treatment triggered an increase in tissue factor (TF) expression. Moreover, the BM-MSCs and AD-MSCs from the +2% group were not able to differentiate to chondrocytes and osteoblasts, respectively. Following Cytomix preconditioning, the metabolism of MSCs was significantly increased while viability was decreased in AD-MSCs, but not in BM-MSCs. MSCs from both tissues showed a significant upregulation of key anti-inflammatory genes, increased secretion of IL-1 receptor antagonist (RA), and enhanced suppression of T-cell proliferation following the Cytomix treatment. Similarly, following a lipopolysaccharide challenge, the Cytomix-treated MSCs suppressed TNF-α secretion, while promoting the production of IL-10 and IL-1RA. These preconditioning approaches facilitate the production of MSCs with robust anti-inflammatory properties. AD-MSCs preconditioned with Cytomix under normoxia appear to be the most promising therapeutic candidates; however, safety concerns, such as thrombogenic disposition of cells due to TF expression, should be carefully considered prior to clinical translation.