Mesenchymal stromal cells (MSCs) have immense potential for use in musculoskeletal tissue regeneration; however, there is still a paucity of evidence on the effect of tenogenic MSCs (TMSCs) in tendon healing invivo. This study aimed to determine the effects of growth differentiation factor 5 (GDF5)-induced rabbit MSCs (rbMSCs) on infraspinatus tendon healing in a New Zealand white rabbit model. In this study, bone marrow-derived rbMSCs were isolated, and 100 ng/mL GDF5 was used to induce tenogenic differentiation in rbMSC. The effects of GDF5 on rbMSC in vitro were assessed by total collagen assay, gene expression analysis, and immunofluorescence staining of tenogenic markers; native tenocytes isolated from rabbit tendon were used as a positive control. In invivo, a window defect was created on the infraspinatus tendons bilaterally. After 3 weeks, the rabbits (n = 18) were randomly divided into six groups and repaired with various interventions: (1) surgical suture; (2) fibrin glue (FG); (3) suture and FG; (4) suture, FG, and rabbit tenocytes (rbTenocyte); (5) suture, FG, and rbMSCs, and (6) suture, FG, and TMSC. All animals were euthanized at 6 weeks postoperatively. The in vitro GDF5-induced rbMSCs (or TMSC) showed increased total collagen expression, augmented scleraxis (SCX), and type-I collagen (COL1A1) mRNA gene expression levels. Immunofluorescence showed similar expression in GDF5-induced rbMSC to that of rbTenocyte. In vivo histological analysis showed progressive tendon healing in the TMSC-treated group; cells with elongated nuclei aligned parallel to the collagen fibers, and the collagen fibers were in a more organized orientation, along with macroscopic evidence of tendon callus formation. Significant differences were observed in the cell-treated groups compared with the non-cell-treated groups. Histological scoring showed a significantly enhanced tendon healing in the TMSC- and rbMSC-treated groups compared with the rbTenocyte group. The SCX mRNA expression levels, at 6 weeks following repair, were significantly upregulated in the TMSC group. Immunofluorescence showed COL-1 bundles aligned in parallel orientation; this was further confirmed in atomic force microscopy imaging. SCX, TNC, and TNMD were detected in the TMSC group. In conclusion, GDF5 induces tenogenic differentiation in rbMSCs, and TMSC enhances tendon healing invivo compared with conventional suture repair. Impact Statement Tendon tears and degeneration are debilitating clinical conditions. To date, the suture method is the only gold standard for repairing tendons. Mesenchymal stromal cells (MSCs) have been suggested for many years for their potential in tissue regeneration, especially in tendon-degenerative conditions. Growth differentiation factor 5 (GDF5) has been reported to induce human MSC into a tenogenic lineage (or TMSC), hence a potential cell source for tendon regeneration. This study reported on the potential of rabbit MSC to differentiate into TMSC via GDF5 induction and the potential of TMSC in tendon healing in a New Zealand white rabbit infraspinatus tendon model fulfilled with the 3R principle (reduce, reuse, and replace).