Allogeneic mesenchymal stem cells (MSCs) are regarded as promising seed cells for engineering cartilage. However, few researches have covered the immune properties of seeded MSCs. Collagen has been considered as good scaffold, whether it has inherent chondrogenic inducibility for MSCs is still in debate. In this study, engineering grafts are constructed by neonatal rabbit MSCs and collagen Type I hydrogel. After periods of culture, the appearance of chondroid tissue in the grafts and the cartilage matrix-specific genes expressions of seeded cells prove the inducibility of collagen hydrogel, even if the growth factors are absence. With the differentiation, immunological properties of MSCs are changing. The expressions of main histocompatibility complex (MHC) molecules increase and the ability to inhibit the proliferation of activated lymphocytes may be declined. But to a large extent, it keeps the low stimulating to allogeneic lymphocytes and the small absolute value of MHCs. The changes are adverse for avoiding inflammation and rejection. Therefore, suitable scaffold and engineering strategies should be selected. For the grafts based on Collagen I hydrogel and MSCs, a longer culture period might not be necessary. To maintain the immune regulation, a higher initial MSCs density in engineering grafts may be more meaningful. (C) 2010 American Institute of Chemical Engineers Biotechnol. Prog., 26: 1749-1758, 2010