Controlled myogenic differentiation of mouse embryonic stem cells by Pax3 combined with purification of PDGFαR+ Flk-1− paraxial mesoderm results in the efficient in vitro generation of early skeletal myogenic progenitors. Upon transplantation into dystrophin-deficient mdx mice, these progenitors promote significant regeneration that is accompanied by improvement in muscle contractility. In this study, we aimed to raise the bar and assess the therapeutic potential of these cells in a more clinically relevant model of muscular dystrophy: the dystrophin-utrophin double-knockout (dKO) mouse. Unlike mdx mice, which display a mild phenotype, dKO mice are severely ill, displaying progressive muscle wasting, impaired mobility, and premature death. Here we show that in this very severe model of DMD, transplantation of Pax3-induced ES-derived skeletal myogenic progenitors results in significant engraftment as evidenced by the presence of Dystrophin+ myofibers with restoration of β-dystroglycan and eNOS within the sarcolemma, and enhanced strengthen of treated muscles. These findings demonstrate that ES-derived myogenic cell preparations are capable of engrafting in severely dystrophic muscle, and promote significant regeneration, providing a rationale for further studies on the potential therapeutic application of these cells in muscular dystrophies.