Mesenchymal stromal cells (MSC) are bone marrow-derived, non-hematopoietic progenitors that are amenable to genetic engineering, making them attractive delivery vehicles for therapeutic proteins. However, limited transplanted cell survival compromises the efficacy of MSC-based gene therapy. We hypothesized that co-implantation of insulin-like growth factor-1 (IGF-I)-overexpressing MSC (MSC-IGF) would improve MSC-based therapy of anemia by providing paracrine support to erythropoietin (EPO)-secreting MSC (MSC-EPO). Murine MSC were found to express the IGF-I receptor and be responsive to IGF-I stimulation. IGF-I also improved MSC survival in vitro. MSC were admixed in a bovine collagen matrix and implanted by subcutaneous injection in a murine model of chronic renal failure. Mice receiving MSC-EPO co-implanted with MSC-IGF experienced a greater and significantly sustained elevation in hematocrit compared to controls; heart function was also improved. Co-implantation of MSC-IGF therefore represents a promising new strategy for enhancing implanted cell survival, and improving cell-based gene therapy of renal anemia.