The objective of this study was to examine the safety of cenplacel (PDA‐002) in patients with peripheral arterial disease (PAD) and a diabetic foot ulcer (DFU). Cenplacel is a mesenchymal‐like cell population derived from full‐term human placenta. This phase 1, dose‐escalation study investigated cenplacel in diabetic patients with chronic DFUs (Wagner grade 1 or grade 2) and PAD [ankle‐brachial index (ABI) >0·5 and ≤0·9], enrolled sequentially into each of four dose cohorts (3 × 106, 10 × 106, 30 × 106 and 100 × 106 cells; administered intramuscularly on study days 1 and 8 in combination with standard of care). Overall, cenplacel was well tolerated in all 15 patients in the study. Before enrollment, nine patients had an ulcer for ≥6 months and 11 had an ABI of 0·7–0·85. No patient met dose‐limiting toxicity criteria and no treatment‐related serious adverse events were reported. There was preliminary evidence of ulcer healing in seven patients (five complete; two partial) within 3 months of cenplacel treatment, and circulating endothelial cell levels (a biomarker of vascular injury in PAD) were decreased within 1 month. Cenplacel was generally safe and well tolerated in patients with chronic DFUs and PAD. Outcomes from this study informed the doses, endpoints, biomarkers and patient population for an ongoing phase 2 trial.