Background: Poor graft function or graft failure after allogeneic stem cell transplantation is an unmet medical need, in which mesenchymal stromal cells (MSC) constitute an attractive potential therapeutic approach. Hypoxia-inducible factor-1α (HIF-1α) overexpression in MSC (HIF-MSC) potentiates the angiogenic and immunomodulatory properties of these cells, so we hypothesized that co-transplantation of MSC-HIF with CD34+ human cord blood cells would also enhance hematopoietic stem cell engraftment and function both in vitro and in vivo. Methods: Human MSC were obtained from dental pulp. Lentiviral overexpression of HIF-1α was performed transducing cells with pWPI-green fluorescent protein (GFP) (MSC WT) or pWPI-HIF-1α-GFP (HIF-MSC) expression vectors. Human cord blood CD34+ cells were co-cultured with MSC WT or HIF-MSC (4:1) for 72 h. Then, viability (Annexin V and 7-AAD), cell cycle, ROS expression and immunophenotyping of key molecules involved in engraftment (CXCR4, CD34, ITGA4, c-KIT) were evaluated by flow cytometry in CD34+ cells. In addition, CD34+ cells clonal expansion was analyzed by clonogenic assays. Finally, in vivo engraftment was measured by flow cytometry 4-weeks after CD34+ cell transplantation with or without intrabone MSC WT or HIF-MSC in NOD/SCID mice. Results: We did not observe significant differences in viability, cell cycle and ROS expression between CD34+ cells co-cultured with MSC WT or HIF-MSC. Nevertheless, a significant increase in CD34, CXCR4 and ITGA4 expression (p = 0.009; p = 0.001; p = 0.013, respectively) was observed in CD34+ cells co-cultured with HIF-MSC compared to MSC WT. In addition, CD34+ cells cultured with HIF-MSC displayed a higher CFU-GM clonogenic potential than those cultured with MSC WT (p = 0.048). We also observed a significant increase in CD34+ cells engraftment ability when they were co-transplanted with HIF-MSC compared to CD34+ co-transplanted with MSC WT (p = 0.016) or alone (p = 0.015) in both the injected and contralateral femurs (p = 0.024, p = 0.008 respectively). Conclusions: Co-transplantation of human CD34+ cells with HIF-MSC enhances cell engraftment in vivo. This is probably due to the ability of HIF-MSC to increase clonogenic capacity of hematopoietic cells and to induce the expression of adhesion molecules involved in graft survival in the hematopoietic niche.