Clinical trials investigating the potential of mesenchymal stromal cells (MSCs) for the treatment of inflammatory diseases, such as acute respiratory distress syndrome (ARDS), have been disappointing, with less than 50% of patients responding to treatment. Licensed MSCs show enhanced therapeutic efficacy in response to cytokine-mediated activation signals. There are two distinct sub-phenotypes of ARDS: hypo- and hyper-inflammatory. We hypothesized that pre-licensing MSCs in a hyper-inflammatory ARDS environment would enhance their therapeutic efficacy in acute lung inflammation (ALI). Serum samples from patients with ARDS were segregated into hypo- and hyper-inflammatory categories based on interleukin (IL)-6 levels. MSCs were licensed with pooled serum from patients with hypo- or hyper-inflammatory ARDS or healthy serum controls. Our findings show that hyper-inflammatory ARDS pre-licensed MSC conditioned medium (MSC-CMHyper) led to a significant enrichment in tight junction expression and enhanced barrier integrity in lung epithelial cells in vitro and in vivo in a vascular endothelial growth factor (VEGF)-dependent manner. Importantly, while both MSC-CMHypo and MSC-CMHyper significantly reduced IL-6 and tumor necrosis factor alpha (TNF-α) levels in the bronchoalveolar lavage fluid (BALF) of lipopolysaccharide (LPS)-induced ALI mice, only MSC-CMHyper significantly reduced lung permeability and overall clinical outcomes including weight loss and clinical score. Thus, the hypo- and hyper-inflammatory ARDS environments may differentially influence MSC cytoprotective and immunomodulatory functions. Display omitted English and colleagues investigated the differential impact of the hypo- and hyper-inflammatory ARDS patient microenvironment on human bone marrow-derived mesenchymal stromal cells (MSCs). While both hypo- and hyper-inflammatory ARDS licensing enhanced MSC immunomodulatory function, only the hyper-licensed MSC secretome promoted lung barrier reparation post-endotoxin challenge in a VEGF-dependent manner.