Idiopathic pulmonary fibrosis is a progressive diffuse parenchymal lung disorder of unknown etiology. Mesenchymal stem cell (MSC)-based therapy is a novel approach with great therapeutic potential for the treatment of lung diseases. Despite demonstration of MSC grafting, the populations of engrafted MSCs have been shown to decrease dramatically 24 hours post-transplantation due to exposure to harsh microenvironments. Hypoxia is known to induce expression of cytoprotective genes and also secretion of anti-inflammatory, anti-apoptotic and anti-fibrotic factors. Hypoxic preconditioning is thought to enhance the therapeutic potency and duration of survival of engrafted MSCs. In this work, we aimed to prolong the duration of survival of engrafted MSCs and to enhance the effectiveness of idiopathic pulmonary fibrosis transplantation therapy by the use of hypoxia-preconditioned MSCs.