The invention relates to a method for producing a mesenchymal stem cell (MSC), the method comprising culturing a primitive mesoderm cell in a mesenchymal colony forming medium (M-CFM) comprising LiCl and FGF2, but excluding PDGF, under normoxic conditions for sufficient time for a mesenchymal colony to form, and culturing the mesenchymal colony adherently to produce the MSC, wherein the MSC has superior T-cell immunosuppressive properties relative to an MSC not produced in said M-CFM. The invention also relates to an MSC produced by the method, a population of MSCs produced by the method, a therapeutic composition comprising the MSC produced by the method, an M-CFM and an M-CFM in concentrated form, and method and uses of the MSC or population in treating a disease.