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Hematopoietic stem cell (HSC) graft cell dose impacts significantly on allogeneic transplant. Similarly, HSC gene therapy outcome is affected by loss of repopulating cells during culture required for ex vivo retrovirus transduction. Stromal cell-derived factor-1 (SDF-1) and its receptor CXCR4 play a central role in marrow trafficking of HSCs, and maneuvers that enhance CXCR4 activation might positively impact outcome in settings of limiting graft dose. CD26/dipeptidyl peptidase IV (DPP-IV) is an ectoenzyme protease that cleaves SDF-1, thus reducing CXCR4 activation. We show that injection of irradiated nonobese diabetic/severe combined immunodeficiency (NOD/SCID) mice with >or=2 micromol Diprotin A (a tripeptide specific inhibitor of CD26 protease activity) at the time of transplant of human granulocyte colony-stimulating factor (G-CSF) mobilized CD34(+) peripheral blood cells (CD34(+) PBCs) results in a >3.4-fold enhancement of engraftment of human cells. We also show that CD26 on residual stromal cells in the irradiated recipient marrow milieu, and not any CD26 activity in the human CD34(+) PBC graft itself, plays the critical role in regulating receptivity of this environment for the incoming graft. Human marrow stromal cells also express CD26, raising the possibility that Diprotin A treatment could significantly enhance engraftment of HSCs in humans in settings of limiting graft dose just as we observed in the NOD/SCID mouse human xenograft model.