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Chronic skin ulcers and burns require advanced treatments. Mesenchymal Stromal Cells (MSCs) are effective in treating these pathologies. Bone Morphogenic Protein-2 (BMP-2) is known to enhance angiogenesis. We investigated whether recombinant human hBMP-2 potentiates the effect of MSCs on wound healing. Severe ulceration was induced in rats by irradiation and treated by co-infusion of MSCs with hBMP-2 into the ulcerated area which accelerated wound healing. Potentiation of the effect of MSCs by hBMP-2 on endothelial repair improved skin healing. HBMP-2 and MSCs synergistically, in a supra additive or enhanced manner, renewed tissue structures, resulting in normalization of the epidermis, hair follicles, sebaceous glands, collagen fibre density, and blood vessels. Co-localization of MSCs with CD31 + cells suggests recruitment of endothelial cells at the site of injection. HBMP-2 and MSCs enhanced angiogenesis and induced micro-vessel formation in the dermis where hair follicles were regenerated. HBMP-2 acts by causing hypoxia-inducible factor-1 α (HIF-1α) expression which impacts endothelial tube formation and skin repair. This effect is abolished by siRNA. These results propose that new strategies adding cytokines to MSCs should be evaluated for treating radiation-induced dermatitis, burns, and chronic ulcers in humans.