Mesenchymal stem/Stromal cells (MSCs) have great therapeutic potentials, and they have been isolated from various tissues and organs including definitive endoderm (DE) organs, such as the lung, liver and intestine. MSCs have been induced from human pluripotent stem cells (hPSCs) through multiple embryonic lineages, including the mesoderm, neural crest, and extraembryonic cells. However, it remains unclear whether hPSCs could give rise to MSCs in vitro through the endodermal lineage. Here, we report that hPSC-derived, SOX17 definitive endoderm progenitors can further differentiate to cells expressing classic MSC markers, which we name definitive endoderm-derived MSCs (DE-MSCs). Single cell RNA sequencing demonstrates the stepwise emergence of DE-MSCs, while endoderm-specific gene expression can be elevated by signaling modulation. DE-MSCs display multipotency and immunomodulatory activity in vitro and possess therapeutic effects in a mouse ulcerative colitis model. This study reveals that, in addition to the other germ layers, the definitive endoderm can also contribute to MSCs and DE-MSCs could be a cell source for regenerative medicine.