Influenza can cause acute lung injury. Because immune responses often play a role, antivirals may not ensure a successful outcome. To identify pathogenic mechanisms and potential adjunctive therapeutic options, we compared the extent to which avian influenza A/H5N1 virus and seasonal influenza A/H1N1 virus impair alveolar fluid clearance and protein permeability in an in vitro model of acute lung injury, defined the role of virus-induced soluble mediators in these injury effects, and demonstrated that the effects are prevented or reduced by bone marrow-derived multipotent mesenchymal stromal cells. We verified the in vivo relevance of these findings in mice experimentally infected with influenza A/H5N1. We found that, in vitro, the alveolar epithelium’s protein permeability and fluid clearance were dysregulated by soluble immune mediators released upon infection with avian (A/Hong Kong/483/97, H5N1) but not seasonal (A/Hong Kong/54/98, H1N1) influenza virus. The reduced alveolar fluid transport associated with down-regulation of sodium and chloride transporters was prevented or reduced by coculture with mesenchymal stromal cells. In vivo, treatment of aged H5N1-infected mice with mesenchymal stromal cells increased their likelihood of survival. We conclude that mesenchymal stromal cells significantly reduce the impairment of alveolar fluid clearance induced by A/H5N1 infection in vitro and prevent or reduce A/H5N1-associated acute lung injury in vivo. This potential adjunctive therapy for severe influenza-induced lung disease warrants rapid clinical investigation.