Pulmonary arterial hypertension (PAH) remains a serious disease, and, while current treatments may prolong and improve quality of life, search for novel and effective therapies is warranted. Using genetically-modified mouse lines, we tested the ability of bone marrow-derived stromal cells (MSCs), to treat chronic hypoxia-induced PAH. Recipient mice were exposed for five weeks to normobaric hypoxia (8%–10% O2), MSC preparations were delivered through jugular vein injection and their effect on PAH was assessed after two additional weeks in hypoxia. Donor MSCs derived from wild-type (WT) mice or Heme Oxygenase-1 (HO-1) null mice (Hmox1KO) conferred partial protection from PAH when transplanted into WT or Hmox1KO recipients, whereas treatment with MSCs isolated from transgenic mice harboring a human HO-1 transgene under the control of surfactant protein C promoter (SHO1 line) reversed established disease in WT recipients. SH01-MSC treatment of Hmox1KO animals, which develop right ventricular (RV) infarction under prolonged hypoxia, resulted in normal RV systolic pressure, significant reduction of RV hypertrophy and prevention of RV infarction. Donor MSCs isolated from a bitransgenic mouse line with doxycycline-inducible, lung-specific expression of HO-1 exhibited similar therapeutic efficacy only upon doxycycline treatment of the recipients. In vitro experiments indicate that potential mechanisms of MSC action include modulation of hypoxia-induced lung inflammation and inhibition of smooth muscle cell proliferation. Cumulative, our results demonstrate that MSCs ameliorate chronic hypoxia – induced PAH and their efficacy is highly augmented by lung-specific HO-1 expression in the transplanted cells, suggesting an interplay between HO-1 dependent and HO-1 independent protective pathways.