Background: Iron overload aggravates the difficulty of umbilical cord blood stem cell engraftment and reduces the survival of patients undergoing hematopoietic stem cells (HSC) transplantation. Mesenchymal stem cells (MSC) have been implicated in playing a significant role in HSC engraftment. This study aimed to determine the effect of intra-bone marrow (IBM) co-transplantation of umbilical cord blood mononuclear cells (UCB-MNC) and mesenchymal stem cells (UC-MSC) on the engraftment and hematopoietic recovery in an iron overload hematopoietic microenvironment. Methods: The iron overload model was established by dose-escalation intraperitoneal injection of iron dextran in NOD/SCID mice. Iron deposition in the bone marrow, heart, and liver was examined using H&E staining. Serum levels of ferritin and iron status in the liver were measured. The iron overload NOD/SCID mice were sublethally irradiated and divided into four groups for transplantation: (1) control group, (2) IBM MSC+ group: IBM injection of combined UCB-MNC/UC-MSC, (3) IBM group: IBM injection of only UCB-MNC, and (4) IV group: intravenous injection of UCB-MNC. Six weeks after transplantation, the human CD45 + cells in the bone marrow were analyzed by flow cytometry. The semi-quantitative analysis of vascular endothelial growth factor (VEGF-a), osteopontin (OPN), and stromal cell-derived factor-1a (SDF-1a) were examined by immunohistochemistry staining (IHC). Results: The survival rate and the percentages of human CD45 + cells in bone marrow were highest in the IBM MSC+ group with statistical significance. In addition, the levels of VEGF-a, OPN, and SDF-1a in bone marrow were all significantly higher in the IBM MSC+ group than the other groups. Conclusion: IBM co-transplantation of UC-MSC might improve the engraftment of UCB-MNC in iron overload NOD/SCID mice. The increased expression of VEGF-a, OPN, and SDF-1a in the bone marrow may be involved in improving the hematopoietic microenvironment and promoting the implantation of human umbilical cord blood stem cells in the bone marrow with iron overload.