Stromal cell-derived factor 1 (SDF-1) plays a major role in the migration, recruitment, and retention of endothelial progenitor cells to sites of ischemic injury and contributes to neovascularization. We provide direct evidence demonstrating an important role for heme oxygenase 1 (HO-1) in mediating the proangiogenic effects of SDF-1. Nanomolar concentrations of SDF-1 induced HO-1 in endothelial cells through a protein kinase C zeta-dependent and vascular endothelial growth factor-independent mechanism. SDF-1-induced endothelial tube formation and migration was impaired in HO-1-deficient cells. Aortic rings from HO-1(-/-) mice were unable to form capillary sprouts in response to SDF-1, a defect reversed by CO, a byproduct of the HO-1 reaction. Phosphorylation of vasodilator-stimulated phosphoprotein was impaired in HO-1(-/-) cells, an event that was restored by CO. The functional significance of HO-1 in the proangiogenic effects of SDF-1 was confirmed in Matrigel plug, wound healing, and retinal ischemia models in vivo. The absence of HO-1 was associated with impaired wound healing. Intravitreal adoptive transfer of HO-1-deficient endothelial precursors showed defective homing and reendothelialization of the retinal vasculature compared with HO-1 wild-type cells following ischemia. These findings demonstrate a mechanistic role for HO-1 in SDF-1-mediated angiogenesis and provide new avenues for therapeutic approaches in vascular repair.