Japanese encephalitis virus (JEV) is the leading cause of viral encephalitis in Asia. Japanese encephalitis (JE) caused by JEV is characterized by extensive inflammatory cytokine secretion, microglia activation, blood-brain barrier (BBB) breakdown, and neuronal death, all of which contribute to the vicious cycle of inflammatory damage. There are currently no effective treatments for JE. Mesenchymal stem cells (MSCs) have been demonstrated to have a therapeutic effect on many central nervous system (CNS) diseases by regulating inflammation and other mechanisms. In vivo, 8- to 10-week-old mice were infected intraperitoneally with JEV and syngeneic bone marrow MSCs were administered through the caudal vein at 1 and 3 days post-infection. The mortality, body weight, and behavior were monitored daily. Brains from each group were harvested at the indicated times for hematoxylin and eosin staining, immunohistochemical observation, flow cytometric analysis, TUNEL staining, Western blot, quantitative real-time polymerase chain reaction, and BBB permeability assays. In vitro, co-culture and mixed culture experiments of MSCs with either microglia or neurons were performed, and then the activation state of microglia and survival rate of neurons were tested 48 h post-infection. MSC treatment reduced JEV-induced mortality and improved the recovery from JE in our mouse model. The inflammatory response, microglia activation, neuronal damage, BBB destruction, and viral load (VL) were significantly decreased in the MSC-treated group. In co-culture experiments, MSCs reprogrammed M1-to-M2 switching in microglia and improved neuron survival. Additionally, the VL was decreased in Neuro2a cells in the presence of MSCs accompanied by increased expression of interferon-α/β. MSC treatment alleviated JEV-induced inflammation and mortality in mice.