The aim of this study was to isolate and characterise equine mesenchymal stromal cells from various sources and to compare their biological properties to that of dermal fibroblasts. By using multiple conventional methods a comparative analysis of the different populations could be made. The results showed that little distinguishes mesenchymal stromal cells from dermal fibroblasts, they have the same morphology and growth characteristics, the same cell surface markers as demonstrated with immunocytochemistry and flow cytometry and the capacity to undergo trilineage differentiation into adipo-, chondro- and osteogenic lineages essentially becoming fat, cartilage and bone. An allogenic synovial fluid model was shown to induce a chondrogenic phenotype in equine mesenchymal stromal cells as well as dermal fibroblasts. A bio-activation assay was performed to evaluate cytokine production of cell populations after activation with Tumour necrosis factor alpha or inflammatory synovial fluid. All of the analysed cell populations demonstrated up-regulation of production of the anti-inflammatory cytokines IL-10 and TGF-β1, after activation with inflammatory synovial fluid, although significant values could not be obtained for every source. As for Prostaglandin E2, results were obtained for bone marrow stromal cells and dermal fibroblasts populations only. Their effects were in opposite; dermal fibroblast reduced the production of Prostaglandin E2 post activation. A functional bio-activation assay has shown promise as a method to distinguish equine mesenchymal stromal cells from dermal fibroblast populations.