Chemokine stromal derived factor 1 (SDF-1) is involved in trafficking of hematopoietic stem cells (HSCs) from the bone marrow (BM) to peripheral blood (PB) and has been found to enhance postischemia angiogenesis. This study was aimed at investigating whether SDF-1 plays a role in differentiation of BM-derived c-kit⁺ stem cells into endothelial progenitor cells (EPCs) and in ischemia-induced trafficking of stem cells from PB to ischemic tissues. We found that SDF-1 enhanced EPC number by promoting α₂, α₄, and α₅ integrin–mediated adhesion to fibronectin and collagen I. EPC differentiation was reduced in mitogen-stimulated c-kit⁺ cells, while cytokine withdrawal or the overexpression of the cyclin–dependent kinase (CDK) inhibitor p16^INK4 restored such differentiation, suggesting a link between control of cell cycle and EPC differentiation. We also analyzed the time course of SDF-1 expression in a mouse model of hind-limb ischemia. Shortly after femoral artery dissection, plasma SDF-1 levels were up-regulated, while SDF-1 expression in the bone marrow was down-regulated in a timely fashion with the increase in the percentage of PB progenitor cells. An increase in ischemic tissue expression of SDF-1 at RNA and protein level was also observed. Finally, using an in vivo assay such as injection of matrigel plugs, we found that SDF-1 improves formation of tubulelike structures by coinjected c-kit⁺ cells. Our findings unravel a function for SDF-1 in increase of EPC number and formation of vascular structures by bone marrow progenitor cells.