Cyclin-dependent kinase inhibitors, including p21^Cip1, are implicated in cell turnover and are active players in cardiovascular wound repair. Here, we show that p21^Cip1 orchestrates the complex interactions between local vascular and circulating immune cells during vascular wound repair. In response to femoral artery mechanical injury, mice with homozygous deletion of p21^Cip1 displayed accelerated proliferation of VSMCs and increased immune cell infiltration. BM transplantation experiments indicated that local p21^Cip1 plays a pivotal role in restraining excessive proliferation during vascular wound repair. Increased local vascular stromal cell–derived factor-1 (SDF-1) levels were observed after femoral artery injury in p21^+/+ and p21^–/– mice, although this was significantly greater in p21^–/– animals. In addition, disruption of SDF-1/CXCR4 signaling inhibited the proliferative response during vascular remodeling in both p21^+/+ and p21^–/– mice. We provide evidence that the JAK/STAT signaling pathway is an important regulator of vascular SDF-1 levels and that p21^Cip1 inhibits STAT3 binding to the STAT-binding site within the murine SDF-1 promoter. Collectively, these results suggest that p21^Cip1 activity is essential for the regulation of cell proliferation and inflammation after arterial injury in local vascular cells and that the SDF-1/CXCR4 signaling system is a key mediator of vascular proliferation in response to injury.