Interleukin-10 (IL-10) gene transduction into allogeneic smooth muscle cells (SMCs) was evaluated to improve the long-term benefits of allogeneic cell transplantation into infarcted myocardium. Allogeneic cells, including SMCs, have been demonstrated to restore cardiac function and repair the infarcted myocardium, but late rejection of the transplanted cells by the host immune system may reverse the benefits of cell therapy. In a rat myocardial infarction model, three groups of rats were injected with either unmodified autologous, unmodified allogeneic, or allogeneic + IL-10 SMCs into the infarct region. Three weeks later, most of the allogeneic cells were rejected, whereas autologous cells were engrafted in the myocardium. IL-10 gene transduction of the allogeneic SMCs significantly improved the cell survival. To understand the mechanism of this improved survival, we evaluated the host immune responses against the SMCs. Allogeneic SMCs expressing IL-10 decreased leukocyte-mediated cytotoxicity in coculture, decreased the number of cytotoxic CD8(+) T-cells, and increased the number of CD4(+)CD25(+) regulatory T-cells in vitro and in vivo. Furthermore, IL-10 prevented the production of antidonor antibodies by the recipients against the allogeneic SMCs. Transplantation of unmodified autologous SMCs, but not unmodified allogeneic SMCs, significantly improved fractional shortening and left ventricular dimensions compared to the media-injected control group. However, IL-10 gene-enhanced allogeneic SMCs improved ventricular function, increased wall thickness, and decreased scar length in association with their enhanced survival. We conclude that IL-10 gene-enhanced cell therapy with allogeneic SMCs prevents detrimental alloimmune responses in the recipient, thereby increasing the survival of transplanted allogeneic SMCs and more effectively restoring cardiac function.