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Here, we report that the functionality of vascular progenitors (VP) generated from normal and disease-primed conventional human induced pluripotent stem cells (hiPSC) can be significantly improved by reversion to a tankyrase inhibitor-regulated human naïve epiblast-like pluripotent state. Naïve diabetic vascular progenitors (N-DVP) differentiated from patient-specific naïve diabetic hiPSC (N-DhiPSC) possessed higher vascular functionality, maintained greater genomic stability, harbored decreased lineage-primed gene expression, and were more efficient in migrating to and re-vascularizing the deep neural layers of the ischemic retina than isogenic diabetic vascular progenitors (DVP). These findings suggest that reprogramming to a stable naïve human pluripotent stem cell state may effectively erase dysfunctional epigenetic donor cell memory or disease-associated aberrations in patient-specific hiPSC. More broadly, tankyrase inhibitor-regulated naïve hiPSC (N-hiPSC) represent a class of human stem cells with high epigenetic plasticity, improved multi-lineage functionality, and potentially high impact for regenerative medicine., hPSCs in culture acquire a more naïve pluripotent state upon tankyrase inhibition. Here, the authors show that tankyrase inhibitor-regulated naïve hiPSCs from diabetic donors generate more vascular progenitors and more efficient engraftment into mouse retina than conventional PSCs.