Endothelial progenitor cells (EPCs) play an important role in vascular repair. We hypothesized that overexpression of endothelial nitric oxide synthase (eNOS) in EPCs enhances inhibition of neointimal hyperplasia and restores endothelium-dependent vasodilatation in injured vessels. Bone marrow-derived EPCs were cultured and expanded in endothelial basal medium. EPCs were transduced with pseudotyped retroviral vectors expressing human eNOS (eNOS-EPCs) or green fluorescent protein (GFP-EPCs). Three days after gene transfer, EPC proliferation and NO production were assayed. Rats received 2×10(6) fluorescently labeled EPCs with expressing eNOS, GFP or saline by tail vein injection directly after balloon injury and again 24h later. Two weeks after transplantation, cell tracking showed that transfused EPCs could return to the injury site. Both eNOS-EPCs transplantation (p<0.05) and GFP-EPCs transplantation (p<0.05) could inhibit neointimal hyperplasia compared with saline injection. The antiproliferative effect of EPCs was further enhanced by overexpression of eNOS (p<0.05, eNOS-EPCs vs. GFP-EPCs). Furthermore, eNOS-EPCs transplantation increased significantly endothelium-dependent vasodilatation compared with GFP-EPCs transplantation. We conclude that transplantation of EPCs overexpressing eNOS could repair the injured vessel by inhibiting neointimal hyperplasia and restoring vascular function. Therefore, gene modified EPCs facilitates the strategy of cell transplantation for vascular dysfunction and restenosis after angioplasty.