Background: Bone marrow–derived mesenchymal stem cells (MSCs) from humans cultured under hypoxic conditions increase bone healing capacity. Hypothesis: Rat MSCs cultured under hypoxic conditions increase the tendon healing potential after transplantation into injured Achilles tendons. Study Design: Controlled laboratory study. Methods: Biomechanical testing, histological analysis, and bromodeoxyuridine (BrdU) labeling/collagen immunohistochemistry were performed to demonstrate that augmentation of an Achilles tendon rupture site with hypoxic MSCs increases healing capacity compared with normoxic MSCs and controls. Fifty Sprague-Dawley rats were used for the experiments, with 2 rats as the source of bone marrow MSCs. The cut Achilles tendons in the rats were equally divided into 3 groups: hypoxic MSC, normoxic MSC, and nontreated (vehicle control). The uncut tendons served as normal uncut controls. Outcome measures included mechanical testing in 24 rats, histological analysis, and BrdU labeling/collagen immunohistochemistry in another 24 rats. Results: The ultimate failure load in the hypoxic MSC group was significantly greater than that in the nontreated or normoxic MSC group at 2 weeks after incision (2.1 N/mm² vs 1.1 N/mm² or 1.9 N/mm², respectively) and at 4 weeks after incision (5.5 N/mm² vs 1.7 N/mm² or 2.7 N/mm², respectively). The ultimate failure load in the hypoxic MSC group at 4 weeks after incision (5.5 N/mm²) was close to but still significantly less than that of the uncut tendon (7.2 N/mm²). Histological analysis as determined by the semiquantitative Bonar histopathological grading scale revealed that the hypoxic MSC group underwent a significant improvement in Achilles tendon healing both at 2 and 4 weeks when compared with the nontreated or normoxic MSC group via statistical analysis. Immunohistochemistry further demonstrated that the hypoxic and normoxic MSC groups had stronger immunostaining for type I and type III collagen than did the nontreated group both at 2 and 4 weeks after incision. Moreover, BrdU labeling of MSCs before injection further determined the incorporation and retention of transplanted cells at the rupture site. Conclusion: Transplantation of hypoxic MSCs may be a better and more readily available treatment than normoxic MSCs for Achilles tendon ruptures. Clinical Relevance: The present study provides evidence that transplantation of hypoxic MSCs may be a promising therapy for the treatment of Achilles tendon ruptures.