Mesenchymal stem cells (MSCs) possess immunomodulatory properties and capacity for endogenous regeneration. Therefore, MSC therapy is a promising treatment strategy for COVID-19. However, the cells cannot stay in the lung long enough to exert their function. The extracellular matrix from porcine bladders (B-ECM) has been shown not only to regulate cellular activities but also to possess immunoregulatory characteristics. Therefore, it can be hypothesized that B-ECM hy-drogel could be an excellent scaffold for MSCs to grow and could anchor MSCs long enough in the lung so that they can exhibit their immunomodulatory functions. In this study, ECM degradation products and a co-culture system of MSCs and macrophages were developed to study the immuno-modulatory properties of ECM and MSCs under septic conditions. The results showed that B-ECM degradation products could decrease pro-inflammatory and increase anti-inflammatory cytokines from macrophages. In an in vivo mimicking co-culture system, MSCs cultured on B-ECM hydrogel exhibited immunomodulatory properties at both gene and protein levels. Both B-ECM degradation products and MSC conditioned medium supported the wound healing of alveolar epithelial cells. The results from the study could offer a basis for investigation of immunomodulation by ECM and MSCs before conducting in vivo experiments, which could later be applied in regenerative medi-cine.