In vitro hypoxic preconditioning (HP) of mesenchymal stem cells (MSCs) could ameliorate their viability and tissue repair capabilities after transplantation into the injured tissue through yet undefined mechanisms. There is also experimental evidence that HP enhances the expression of both stromal-derived factor-1 (SDF-1) receptors, CXCR4 and CXCR7, which are involved in migration and survival of MSCs in vitro, but little is known about their role in the in vivo therapeutic effectiveness of MSCs in renal ischemia/reperfusion (I/R) injury. Here, we evaluated the role of SDF-1-CXCR4/CXCR7 pathway in regulating chemotaxis, viability and paracrine actions of HP-MSCs in vitro and in vivo. Compared with normoxic preconditioning (NP), HP not only improved MSC chemotaxis and viability but also stimulated secretion of proangiogenic and mitogenic factors. Importantly, both CXCR4 and CXCR7 were required for the production of paracrine factors by HP-MSCs though the former was only responsible for chemotaxis while the latter was for viability. SDF-1α expression was upregulated in postischemic kidneys. After 24 h systemical administration following I/R, HP-MSCs but not NP-MSCs were selectively recruited to ischemic kidneys and this improved recruitment was abolished by neutralization of CXCR4, but not CXCR7. Furthermore, the increased recruitment of HP-MSCs was associated with enhanced functional recovery, accelerated mitogenic response, and reduced apoptotic cell death. In addition, neutralization of either CXCR4 or CXCR7 impaired the improved therapeutic potential of HP-MSCs. These results advance our knowledge about SDF-1-CXCR4/CXCR7 axis as an attractive target pathway for improving the beneficial effects of MSC-based therapies for renal I/R.