Peripheral arterial diseases, the major complication of diabetes, can result in lower limb amputation. Since endothelial progenitor cells (EPCs) are involved in neovascularization, the aim of this study was to examine whether EPCs isolated from Wharton's jelly (WJ-EPCs) of the umbilical cord, a rich source of mesenchymal stem cells, could reduce ischemia-induced hind limb injury in diabetic mice. We evaluated the effects of WJ-EPC transplantation on hind limb injury caused by femoral artery ligation in mice with streptozotocin (STZ)-induced diabetes. We found that the ischemic hind limb in mice with STZ-induced diabetes showed decreased blood flow and capillary density and increased cell apoptosis and that these effects were significantly inhibited by an injection of WJ-EPCs. In addition, hypoxia-inducible factor-1α (HIF-1α) and interleukin-8 (IL-8) were highly expressed in transplanted WJ-EPCs in the ischemic skeletal tissues and were present at high levels in hypoxia-treated cultured WJ-EPCs. Moreover, incubation of the NOR skeletal muscle cell line under hypoxic conditions in conditioned medium from EPCs cultured for 16 h under hypoxic conditions resulted in decreased expression of pro-apoptotic proteins and increased expression of anti-apoptotic proteins. The inhibition of HIF-1α or IL-8 expression by EPCs using HIF-1α siRNA or IL-8 siRNA, respectively, prevented this change in expression of apoptotic-related proteins. Wharton's jelly in the umbilical cord is a valuable source of EPCs, and transplantation of these EPCs represents an innovative therapeutic strategy for treating diabetic ischemic tissues. The HIF-1α/IL-8 signaling pathway plays a critical role in the protective effects of EPCs in the ischemic hind limb of diabetic mice.