Lupus nephritis (LN) is one of the most severe complications of systemic lupus erythematosus (SLE) caused by uncontrolled activation of the complement system. Mesenchymal stem cells (MSCs) exhibit clinical efficacy for severe LN in our previous studies, but the underlying mechanisms of MSCs regulating complement activation remain largely unknown. Here we show that significantly elevated C5a and C5b-9 were found in patients with LN, which were notably correlated with proteinuria and different renal pathological indexes of LN. MSCs suppressed systemic and intrarenal activation of C5, increased the plasma levels of factor H (FH), and ameliorated renal disease in lupus mice. Importantly, MSCs transplantation up-regulated the decreased FH in patients with LN. Mechanistically, interferon-α enhanced the secretion of FH by MSCs. These data demonstrate that MSCs inhibit the activation of pathogenic C5 via up-regulation of FH, which improves our understanding of the immunomodulatory mechanisms of MSCs in the treatment of lupus nephritis.