Transplantation of unfractionated bone marrow mononuclear cells (BMCs) repairs and/or regenerates the damaged myocardium allegedly due to secretion from surviving BMCs (paracrine effect). However, donor cell survival after transplantation is known to be markedly poor. This discrepancy led us to hypothesize that dead donor BMCs might also contribute to the therapeutic benefits from BMC transplantation. High mobility group box 1 (HMGB1) is a nuclear protein that stabilizes nucleosomes, and also acts as a multi-functional cytokine when released from damaged cells. We thus studied the role of extracellular HMGB1 in the effect of BMC transplantation for heart failure. Four weeks after coronary artery ligation in female rats, syngeneic male BMCs (or PBS only as control) were intramyocardially injected with/without anti-HMGB1 antibody or control IgG. One hour after injection, ELISA showed that circulating extracellular HMGB1 levels were elevated after BMC transplantation compared to the PBS injection. Quantitative donor cell survival assessed by PCR for male-specific sry gene at days 3 and 28 was similarly poor. Echocardiography and catheterization showed enhanced cardiac function after BMC transplantation compared to PBS injection at day 28, while this effect was abolished by antibody-neutralization of HMGB1. BMC transplantation reduced post-infarction fibrosis, improved neovascularization, and increased proliferation, while all these effects in repairing the failing myocardium were eliminated by HMGB1-inhibition. Furthermore, BMC transplantation drove the macrophage polarization towards alternatively-activated, anti-inflammatory M2 macrophages in the heart at day 3, while this was abolished by HMGB1-inhibition. Quantitative RT-PCR showed that BMC transplantation upregulated expression of an anti-inflammatory cytokine IL-10 in the heart at day 3 compared to PBS injection. In contrast, neutralizing HMGB1 by antibody-treatment suppressed this anti-inflammatory expression. These data suggest that extracellular HMGB1 contributes to the effect of BMC transplantation to recover the damaged myocardium by favorably modulating innate immunity in heart failure.