To investigate whether bone marrow mesenchymal stem cells (BMMSCs) modulate periodontal bone repair through the hydroxylase domain-containing protein 2 (PHD2)/hypoxia- inducible factor-1 (HIF-1) signalling pathway in response to inflammatory conditions. Osteogenic differentiation of PHD2 shRNA-modified BMMSCs and the possible mechanism were explored in an inflammatory microenvironment stimulated by porphyromonas gingivalis lipopolysaccharide (Pg-LPS) in vitro. The effect of PHD2 gene-modified BMMSCs on periodontal bone loss was evaluated with experimental periodontitis. Pg-LPS stimulation greatly impaired the osteogenic differentiation of BMMSCs, whereas the silence of PHD2 significantly enhanced the osteogenesis of BMMSCs. More importantly, increased level of vascular endothelial growth factor (VEGF) was detected under Pg-LPS stimulation, which was verified to be associated with the augmented osteogenesis. In experimental periodontitis, PHD2-modified BMMSCs transplantation elevated osteogenic parameters and the expression of VEGF in periodontal tissue. This study highlighted that PHD2 gene silencing could be a feasible approach to combat inflammatory bone loss by rescuing the dysfunction of seed cells.