Mesenchymal stromal cells (MSC) based therapies are considered as an ideal stem cell-based treatment for cardiovascular diseases due to their immunosuppressive characteristics, anti-inflammatory properties, and differentiation potential. Diabetic microenvironment encompassing high glucose, inflammation, hypoxic conditions, and reactive oxygen species content has deleterious effects on the functionality of MSCs. The purpose of this study was to understand the molecular basis of diabetes-induced MSC dysfunction and potentially reversing these dysfunctions to enhance cell-based therapeutics for myocardial repair in diabetic patients. we isolated MSCs from bone marrow of mice from db/+ non-diabetic (WT-MSC) and diabetic mice (db/db-MSC) and examined the effect of diabetes on MSC differentiation, proliferation, angiogenesis, and immunomodulation in vitro, and their reparative functions on myocardial injury repair post-MI in mice. Compared to WT-MSC, MSCs isolated from bone marrow of diabetic mice showed impaired differentiation, decreased proliferation, reduced immunomodulatory activities and impairment to promote endothelial cell tubulogenesis. Our data also shows diminished functional activity of diabetic MSCs to improve post-MI cardiac functions. Furthermore, we found that glypican-3 (GPC3), a heparan sulfate proteoglycan, is highly upregulated in diabetic MSCs when compared to WT-MSC. GPC3 overexpression in WT-MSC showed decreased proliferation, lowers the immunosuppression activity, and reduced vascular tube formation. Interestingly, GPC3 knockdown in WT-MSC showed increased proliferation, improved the immunosuppression activity, and enhanced vascular tube formation. Our data also showed that, knockdown of GPC3 in diabetic MSCs restore their functions. In conclusion, these data suggest that diabetes increases GPC3 expression in MSC thereby impairs MSC functions under diabetic condition and knockdown of GPC3 in diabetic MSC rescued diabetes-induced dysfunctions. Ongoing studies are testing whether ex vivo GPC3 knockdown in db/db MSCs will rescue their defective cardiac reparative activities, post-MI.