Ischemia-Reperfusion (IR) injury of limb remains a significant clinical problem causing secondary complications and restricting clinical recovery, despite rapid restoration of blood flow and successful surgery. In an attempt to further improve post ischemic tissue repair, we investigated the effect of a local administration of bone marrow derived stem cells (BMDSCs) in the presence or absence of immune-regulatory enzyme, IDO, in a murine model. A whole limb warm ischemia-reperfusion model was developed using IDO sufficient (WT) and deficient (KO) mice with C57/BL6 background. Twenty-four hours after injury, 5 × 105 cells (5×105 cells/200 µL of PBS solution) BMDSCs (Sca1 + cells) were injected intramuscularly while the control group received just the vehicle buffer (PBS). Forty-eight to seventy-two hours after limb BMDSC injection, recovery status including the ratio of intrinsic paw function between affected and normal paws, general mobility, and inflammatory responses were measured using video micrometery, flow cytometry, and immunohistochemistry techniques. Additionally, MRI/MRA studies were performed to further study the inflammatory response between groups and to confirm reconstitution of blood flow after ischemia. For the first time, our data, showed that IDO may potentially represent a partial role in triggering the beneficial effects of BMDSCs in faster recovery and protection against structural changes and cellular damage in a hind limb IR injury setting (P = 0.00058).