Oncolytic adenoviral virotherapy is an attractive treatment modality for cancer. However, following intratumoral injections, oncolytic viruses fail to efficiently migrate away from the injection site and are rapidly cleared by the immune system. We have previously demonstrated enhanced viral delivery and replicative persistence in vivo using human bone marrow-derived mesenchymal stem cells (MSCs) as delivery vehicles. In this study, we evaluated the immune response to adenovirus (Ad)-loaded MSCs using the semipermissive cotton rat (CR) model. First, we isolated MSCs from CR bone marrow aspirates. Real-time quantitative PCR analysis revealed that CR MSCs supported the replication of Ads in vitro. Moreover, we observed similar levels of suppression of T-cell proliferation in response to mitogenic stimulation, by MSCs alone and virus-loaded MSCs. Additionally, we found that MSCs suppressed the production of interferon-γ (IFN-γ) by activated T cells. In our in vivo model, CR MSCs enhanced the dissemination and persistence of Ad, compared to virus injection alone. Collectively, our data suggest that the use of MSCs as a delivery strategy for oncolytic Ad potentially offers a myriad of benefits, including improved delivery, enhanced dissemination, and increased persistence of viruses via suppression of the antiviral immune response.