Bone marrow-derived mesenchymal stem cells (MSCs) can serve as a vehicle for gene therapy. Angiopoietin-1 (Ang1) is a critical factor for endothelial survival and vascular stabilization via the inhibition of endothelial permeability and leukocyte–endothelium interactions. We hypothesized that MSC-based Ang1 gene therapy might be a potential therapeutic approach for lipopolysaccharide (LPS)-induced lung injury. MSCs were isolated from 6 week-old inbred male mice and transduced with the Ang1 gene, using a lentivirus vector. The MSCs showed no significant phenotypic changes after transduction. In the in vivo mouse model, the LPS-induced lung injury was markedly alleviated in the group treated with MSCs carrying Ang1 (MSCs–Ang1), compared with groups treated with MSCs or Ang1 alone. The expression of Ang1 protein in the recipient lungs was increased after MSCs–Ang1 administration. The histopathological and biochemical indices of LPS-induced lung injury were improved after MSCs-based Ang1 gene treatment. MSCs–Ang1 administration also reduced pulmonary vascular endothelial permeability and the recruitment of inflammatory cells into the lung. Cells of MSC origin could be detected in the recipient lungs for 2 weeks after injection with MSCs. These results suggest that MSCs and Ang1 have a synergistic role in the treatment of LPS-induced lung injury. MSC-based Ang1 gene therapy may be developed as a potential novel strategy for the treatment of acute lung injury. Copyright © 2008 Pathological Society of Great Britain and Ireland. Published by John Wiley & Sons, Ltd.