Mesenchymal stem cells (MSCs) are novel therapeutics for the treatment of Crohn's disease. However, their mechanism of action is unclear, especially in disease-relevant chronic models of inflammation. Thus, we used SAMP-1/YitFc (SAMP), a chronic and spontaneous murine model of small intestinal inflammation, to study the therapeutic effects and mechanism of action of human bone marrow-derived MSCs (hMSC). hMSC dose-dependently inhibited naïve T lymphocyte proliferation via prostaglandin E₂ (PGE₂) secretion and reprogrammed macrophages to an anti-inflammatory phenotype. We found that the hMSCs promoted mucosal healing and immunologic response early after administration in SAMP when live hMSCs are present (until day 9) and resulted in a complete response characterized by mucosal, histological, immunologic, and radiological healing by day 28 when no live hMSCs are present. hMSCs mediate their effect via modulation of T cells and macrophages in the mesentery and mesenteric lymph nodes (mLN). Sc-RNAseq confirmed the anti-inflammatory phenotype of macrophages and identified macrophage efferocytosis of apoptotic hMSCs as a mechanism that explains their long-term efficacy. Taken together, our findings show that hMSCs result in healing and tissue regeneration in a chronic model of small intestinal inflammation and despite being short-lived, exert long-term effects via sustained anti-inflammatory programming of macrophages via efferocytosis.