Cells derived from the placenta have become the focus of extensive research concerning their ability to be used for regenerative medicine or cellular therapies. In a previous study, we characterized amnion-derived multipotent progenitor cells, or AMP cells, by in vitro methods and showed they were able to inhibit antigen-specific T-cell proliferation in a cell-to-cell contact-dependent fashion. Here we examine specific mechanisms involved in immunomodulation by AMP cells. We found that AMP cells significantly inhibited monocyte-derived myeloid dendritic cell (DC) maturation when placed in coculture. Cocultured monocytes retained the nondifferentiated macrophage marker CD14 while exhibiting significant reduction in DC maturation markers CD83 and CD1a, indicating an immature DC maturation state that is pivotal in determining its immune stimulatory or regulatory status. This effect was again dependent on cell-to-cell contact interaction. We also found a significant shift in cytokines present in the microenvironment of cocultures, which indicated a regulatory DC function rather than a stimulatory cell type. Here supernatants taken from AMP cell/monocyte cocultures yielded significant levels of regulatory cytokines, such as PGE2, IL-6, IL-10, and MIC-1. The soluble form of HLA-G was also found at higher levels in cocultures. In contrast, supernatants contained significantly less amounts of the T-cell-stimulating factor IL-12, which is normally produced by activated DCs. Interestingly, cocultured monocytes acquired significant expression of HLA-G on their cell surface over time. HLA-G has multifaceted immunological implications and may be a key molecule in influencing these cells to behave as regulatory DCs. Together, the influence of AMP cells on maturing DCs may favor a regulatory pathway that can be useful for therapeutic applications for immune-mediated disorders or transplantation therapies.