Acute lung injury (ALI) and acute respiratory distress syndrome (ARDS) are common and potentially lethal clinical syndromes characterized by acute respiratory failure resulting from excessive pulmonary inflammation, noncardiogenic pulmonary edema, and alveolar-capillary barrier disruption. At present, there is no effective and specific therapy for ALI/ARDS. Mesenchymal stem cells (MSCs) have well-known therapeutic potential in patients with ALI/ARDS. Heme oxygenase-1 (HO-1), a cytoprotective enzyme, possesses antioxidative, anti-inflammatory, and antiapoptotic effects. Thus, a combination of MSC transplantation with HO-1 delivery may have an additional protective effect against ALI/ARDS. This study investigated the effect of HO-1modified bone-marrow-derived MSCs (MSCs-HO-1) on lipopolysaccharide (LPS)induced ALI and its underlying mechanisms. We established MSCs-HO-1 through lentiviral transduction. The ALI rat model was established by successive LPS inhalations following injection with MSCs-HO-1. The survival rate, histological changes in the lungs, total protein concentration and neutrophil counts in bronchoalveolar lavage fluid, lung wet/dry weight ratio, cytokine levels in serum and lungs, nuclear transcription factor-κB activity, and protein expression of Toll-like receptor 4 signaling adaptors were examined. Furthermore, the cell viability, apoptosis, and paracrine activity of MSCs-HO-1 were examined under inflammatory stimuli in vitro. MSCs-HO-1 injection improved these parameters compared with primary unmodified MSCs. Moreover, MSCs-HO-1 had superior prosurvival and antiapoptotic properties and enhanced paracrine functions in vitro. Therefore, MSCs-HO-1 exert an enhanced protective effect to alleviate LPS-induced ALI in rats, and the mechanisms may be partially associated with superior prosurvival, antiapoptosis, and enhanced paracrine functions of MSCs-HO-1. These findings provide a novel insight into MSC-based therapeutic strategies for treating ALI/ARDS. K E Y W O R D S acute lung injury, heme oxygenase-1, lipopolysaccharide, mesenchymal stem cells, RRID