To examine whether the peroxisome proliferator-activated receptor-γ coactivator-1α (PGC-1α), a key regulator linking angiogenesis and metabolism, could enhance the engraftment and angiogenesis of mesenchymal stem cells (MSCs) in diabetic hindlimb ischemia, we engineered the overexpression of PGC-1α within MSCs using an adenoviral vector encoding green fluorescent protein and PGC-1α, and then tested the survivability and angiogenesis of MSCs in vitro and in vivo. Under the condition of hypoxia concomitant with serum deprivation, the overexpression of PGC-1α in MSCs resulted in a higher expression level of hypoxia-inducible factor-1α (Hif-1α), a greater ratio of B-cell lymphoma leukemia-2 (Bcl-2)/Bcl-2-associated X protein (Bax), and a lower level of caspase 3 compared with the controls, followed by an increased survival rate and an elevated expression level of several proangiogenic factors. In vivo, the MSCs modified with PGC-1α could significantly increase the blood perfusion and capillary density of ischemic hindlimb of the diabetic rats, which was correlated to an improved survivability of MSCs and an increased level of several proangiogenic factors secreted by MSCs. We identified for the first time that PGC-1α could enhance the engraftment and angiogenesis of MSCs in diabetic hindlimb ischemia.