Transplantation of mesenchymal stem cells (MSCs) has been shown to enhance the improvement in kidney function following injury. However, the poor survival and grafting of the stem cells to the site of injury has restricted their therapeutic efficacy. Accelerated regeneration potential of MSCs has been observed when they were exposed to hypoxic stress or genetic modulation by various cytokines and growth factors. These preconditioning strategies may stimulate endogenous mechanisms resulting in multiple cellular responses. In this study, we used IL-7 gene to transfect MSCs. IL-7 is a hematopoietic growth factor that plays an important role in cell survival, proliferation, and differentiation. MSCs were also subjected to hypoxic stress for 8 and 24 h. These preconditioned MSCs were co-cultured with cisplatin-treated injured Mardin-Darby bovine kidney (MDBK) cells and their fusion potential was analyzed. Flow cytometry of fluorescently labeled preconditioned MSCs and injured MDBK cells revealed evidence of significant (P < 0.001) cell fusion compared to that of the normal MSCs. In addition, we also observed improved migration ability of these preconditioned MSCs in the in vitro wound healing assay, as compared to the normal MSCs. We conclude that hypoxic stress and IL-7 overexpression can enhance the renal regeneration potential of MSCs. This study would help in designing more potent therapeutic strategy in which preconditioned MSCs can be used for renal regeneration.