Hematopoietic stem/progenitor cells (HS/PCs) have the propensity of ischemic vascular repair, and this innate vasoprotective function is impaired in diabetes. Angiotensin-converting enzyme (ACE) and ACE-2 are primary enzymes of the cardiovascular-detrimental and protective axes of the renin-angiotensin system, respectively. In this study, we tested the hypothesis that diabetic dysfunction in HS/PCs is due to ACE2/ACE-imbalance, and that increasing ACE2 expression will restore the vasoreparative potential. Lineage- (Lin - ) or CD34 + cells were isolated from the peripheral blood mononuclear cells (MNCs) of nondiabetic subjects (ND), and type 1 or type 2 diabetic (DB) patients (male or female, age 48-76 years, HbA1C 6.5-11.2). ACE and ACE2 activities were measured in lysates of MNCs, Lin - and CD34 + cells by enzyme-selective fluorogenic substrates and inhibitors. Lentiviral ACE2 (LV-ACE2) gene transfer was carried out by spinoculation. Reparative function of Lin - cells was evaluated in Foxn1 nu mice undergoing hind limb ischemia (HLI). Lin - cells with or without ACE2-overexpression were administered (i.m) in the peri-ischemic region, and the blood flow recovery was monitored. Circulating Lin - or CD34 + cells are lower in DB (Lin - ((2±0.2)х10 5 , P<0.04) and CD34 + ((0.6±0.1)х10 3 , P<0.02), n=8) compared to ND group (Lin - (25±4)х10 5 ; CD34 + (2±0.4)х10 3 per 10 6 MNCs, n=8). This was associated with decrease in ACE2 and increase in ACE activity, resulting in 4.5-fold decrease in ACE2/ACE ratio in DB-CD34 + cells (0.4±0.07 vs ND 1.8±0.2, P<0.01, n=6). This was negatively correlated with HbA1C (r 2 =0.89, P<0.01). Administration of ND-Lin - cells has no effect on the blood flow recovery of mice following HLI. In contrast, administration of DB-Lin - cells decreased this recovery (48±6%, n=5, P<0.001 vs ND-Lin - 105±7%). However, treatment with ACE2-overexpressing DB-Lin - cells robustly enhanced blood flow recovery (112±8%, n=4, P<0.001 vs DB). These observations suggest that ACE2/ACE imbalance is correlated with diabetic vasoreparative dysfunction in HS/PCs, and that increasing ACE2 expression reverses the dysfunction. ACE2 gene transfer is a promising approach for enhancing vascularization outcomes of cell-based therapies in diabetic individuals.