Interest in human mesenchymal stem cells (MSCs) as an immune therapy has been on the rise for the past two decades with cutting edge research yielding promising results, but there are currently no MSC therapies approved by the food and drug administration (FDA). Failure of MSCs to translate as a therapy has been reported by the National Cell Manufacturing Consortium (NCMC) to be due to a lack of reliable potency metrics and sufficient understanding of the mechanism of action. Here we show that cell membrane components are a good candidate to interrogate the MSC immunomodulatory mechanism of action and provide a method to increase MSC potency through the sphingolipid pathway. We found that high and low indolamine-2,3-deoxygenase (IDO) potency cells have distinct morphological signatures that is also reflected in the sphingolipid activity, with low IDO potency cell lines having low sphingomyelinase activity and high IDO potency cell lines having high sphingomyelinase activity. Perturbation of the salvage pathway with the addition of exogenous neutral sphingomyelinase not only shifted morphological signatures to a high potency profile, but also significantly increased IDO activity within both high and low IDO potency donors. These results provide a proof of concept for the engineering of MSC immunomodulation and provides further evidence for the role sphingolipids in MSC immunomodulation that can enable further investigation.