For the application of mesenchymal stem cells (MSCs) as clinical therapeutics, the regulation of cellular aging is important to protect hMSCs from an age-associated decline in their function. In this study, we evaluated the effects of hypoxia on cellular senescence and the immunomodulatory abilities of hUCB-MSCs. Hypoxic-cultured hUCB-MSCs showed enhanced proliferation and had increased immunosuppressive effects on mitogen-induced mononuclear cell proliferation. We found that BMI1, a member of the polycomb repressive complex protein group, showed increased expression in hypoxic-cultured hUCB-MSCs, and the further knock-down of BMI1 in hypoxic cells induced decreased proliferative and immunomodulatory abilities in hUCB-MSCs, along with COX-2/PGE2 down-regulation. Furthermore, the expression of phosphorylated p38 MAP kinase increased in response to the over-expression of BMI1 in normoxic conditions, suggesting that BMI1 regulates the immunomodulatory properties of hUCB-MSCs via p38 MAP kinase-mediated COX-2 expression. More importantly, we identified BMI1 as a direct repressor of MAP kinase phosphatase-1 (MKP-1)/DUSP1, which suppresses p38 MAP kinase activity. In conclusion, our results demonstrate that BMI1 plays a key role in the regulation of the immunomodulatory properties of hUCB-MSCs, and we suggest that these findings might provide a strategy to enhance the functionality of hUCB-MSCs for use in therapeutic applications.