Immune rejection caused by mismatches in human leucocyte antigens (HLAs) remains a major obstacle to the success of allogeneic cell therapies. Current strategies for the generation of 'universal' immune-compatible cells, particularly the editing of HLA class I (HLA-I) genes or the modulation of proteins that inhibit natural killer cells, often result in genomic instability or cellular cytotoxicity. Here we show that a β2-microglobulin super-enhancer (B2M-SE) that is responsive to interferon-γ is a critical regulator of the expression of HLA-I on mesenchymal stromal cells (MSCs). Targeted epigenetic repression of B2M-SE in MSCs reduced the surface expression of HLA-I below the threshold required to activate allogenic T cells while maintaining levels sufficient to evade cytotoxicity mediated by natural killer cells. In a humanized mouse model, the epigenetically edited MSCs demonstrated improved survival by evading the immune system, allowing them to exert enhanced therapeutic effects on LPS-induced acute lung injury. Targeted epigenetic repression of B2M-SE may facilitate the development of off-the-shelf cell sources for allogeneic cell therapy.