Endothelial dysfunction, characterized by diminished endothelial progenitor cell (EPC) function and flow-mediated vasodilation (FMD), is a clinically significant feature of heart failure (HF). Mesenchymal stem cells (MSCs), which have pro-angiogenic properties, have the potential to restore endothelial function. Accordingly, we tested the hypothesis that MSCs increase EPC function and restore flow-mediated vasodilation (FMD).Idiopathic dilated and ischemic cardiomyopathy patients were randomly assigned to receive autologous (n = 7) or allogeneic (n = 15) MSCs. We assessed EPC-colony forming units (EPC-CFUs), FMD, and circulating levels of vascular endothelial growth factor (VEGF) in patients before and three months after MSC transendocardial injection (n = 22) and in healthy controls (n = 10).EPC-colony forming units (CFUs) were markedly reduced in HF compared to healthy controls (4 ± 3 vs. 25 ± 16 CFUs, P < 0.0001). Similarly, FMD% was impaired in HF (5.6 ± 3.2% vs. 9.0 ± 3.3%, P = 0.01). Allogeneic, but not autologous, MSCs improved endothelial function three months after treatment (Δ10 ± 5 vs. Δ1 ± 3 CFUs, P = 0.0067; Δ3.7 ± 3% vs. Δ-0.46 ± 3% FMD, P = 0.005). Patients who received allogeneic MSCs had a reduction in serum VEGF levels three months after treatment, while patients who received autologous MSCs had an increase (P = 0.0012), and these changes correlated with the change in EPC-CFUs (P < 0.0001). Lastly, human umbilical vein endothelial cells (HUVECs) with impaired vasculogenesis due to pharmacologic nitric oxide synthase inhibition, were rescued by allogeneic MSC conditioned medium (P = 0.006).These findings reveal a novel mechanism whereby allogeneic, but not autologous, MSC administration results in the proliferation of functional EPCs and improvement in vascular reactivity, which in turn restores endothelial function towards normal in patients with HF. These findings have significant clinical and biological implications for the use of MSCs in HF and other disorders associated with endothelial dysfunction.