Upon implantation of a biomaterial, mesenchymal stem cells and macrophages contribute to the wound healing response and the regeneration cascade. Although biomaterial properties are known to direct MSC differentiation and macrophage polarization, the role of biomaterial cues in directing the crosstalk between the two cell types is still poorly understood. This study aimed to elucidate the role of substrate stiffness in modulating the immunomodulatory properties of MSCs and to shed light on their complex interactions with macrophages when presented with diverse stiffness cues. We show that MSCs are not immunomodulatory in the absence of an inflammatory stimulus. Using collagen-coated polyacrylamide gels of varying stiffness values, we demonstrate that the immunomodulatory capability of MSCs is not dependent on the stiffness of the underlying substrate. Moreover, using paracrine and direct contact culture models, we show that a bidirectional crosstalk between MSCs and macrophages is necessary for promoting anti-inflammatory responses and positive immunomodulation, which is dependent on the stiffness of the underlying substrate. We finally show that direct cell-cell contact is not essential for this effect, with paracrine interactions promoting immunomodulatory interactions between MSCs and macrophages. Together, these results demonstrate that biophysical cues presented by biomaterials can be tuned to promote positive interactions between MSCs and macrophages that can direct the downstream regenerative response.