Mesenchymal stem cells (MSCs) isolated from healthy dental tissues are being investigated as an alternative source of MSCs for the treatment of damaged tissues and inflammatory diseases. Here we investigated whether MSCs from periapical lesions (PL-MSCs) also possess multi-lineage differentiation capacity and immunomodulatory properties. PL-MSCs, isolated by collagenase/DNAse digestion from surgically extracted PLs, were compared with MSCs from non-inflamed dental pulp (DP-MSCs) and dental follicle (DF-MSCs) for their phenotype and multi-potent differentiation potential. The anti-inflammatory and immunomodulatory effects of PL-MSCs were studied in co-culture with peripheral blood mononuclear cells (PB-MNCs) and PL-inflammatory cells (PL-ICs). PL-MSCs were characterized by typical MSCs phenotype, lower clonogenicity and self-renewal rate, compared to DF-MSCs and DP-MSCs. These cells possess the potential to differentiate into adipocyte-, osteoblast- and chondrocyte-like cells in vitro, which differs from that of DP-MSCs and DF-MSCs. PL-MSCs inhibited phytohemaglutinine-induced proliferation of PB-MNCs and production of IL-2, IFNγ and IL-5 in the co-culture, probably via TGF-β-dependent mechanisms. These cells also suppressed the production of IL-1β, IL-6, and TNF-α by PL-ICs via soluble mediators, whereas the suppression of IL-8 production required a direct cell-to-cell contact. The differentiation potential of PL-MSCs and their immunosuppressive/anti-inflammatory properties could be beneficial for the treatment of chronic periodontal diseases.