Mechanisms that hinder ischemia-induced neovascularization in diabetes remain poorly understood. We hypothesized that endogenous bone marrow mononuclear cell (BM-MNC) dysfunction may contribute to the abrogated postischemic revascularization reaction associated with diabetes. We first analyzed the effect of diabetes (streptozotocin, 40 mg/kg) on BM-MNC pro-angiogenic potential in a model of surgically induced hindlimb ischemia. In nondiabetic animals, transplantation of BM-MNCs isolated from nondiabetic animals raised the ischemic/nonischemic angiographic score, capillary number, and blood flow recovery by 1.8-, 2.7-, and 2.2-fold, respectively, over that of PBS-injected nondiabetic animals (P < 0.05). Administration of diabetic BM-MNCs also improved the neovascularization reaction in ischemic hindlimbs of nondiabetic mice but to a lesser extent from that observed with nondiabetic BM-MNC transplantation. In diabetic mice, injection of nondiabetic BM-MNCs was still more efficient than that of diabetic BM-MNCs. Such BM-MNC dysfunction was associated with the impairment of diabetic BM-MNC capacity to differentiate into endothelial progenitor cells (EPCs) in vitro and to participate in vascular-like structure formation in a subcutaneous Matrigel plug. Placenta growth factor (PlGF) administration improved by sixfold the number of EPCs differentiated from diabetic BM-MNCs in vitro and enhanced ischemic/nonischemic angiographic score, capillary number and blood flow recovery by 1.9-, 1.5- and 1.6-fold, respectively, over that of untreated diabetic animals (P < 0.01). Endogenous BM-MNC pro-angiogenic potential was affected in diabetes. Therapeutic strategy based on PlGF administration restored such defects and improved postischemic neovascularization in diabetic mice.