The present invention is directed to purified preparations of dermal mesenchymal stem cells that are characterized by the cell surface expression of the ABCB5 P-glycoprotein. The cells may be used for any purpose that mesenchymal stem cells from other course are used. For instance they may be administered to treat an organ transplant recipient to improve allograft survival or as a treatment to patients with autoimmune diseases such as multiple sclerosis and rheumatoid arthritis.