Bronchopulmonary dysplasia (BPD) is the most common type of chronic lung disease in infancy; however, there is no effective treatment for it. In the present study, a neonatal mouse BPD model was established by continuous exposure to high oxygen (HO) levels. Mice were divided randomly into 5 groups: control, BPD, EPO, MSCs, and MSCs+EPO. At 2 weeks post-treatment, vessel density and the expression levels of endothelial growth factor (VEGF), stromal cell-derived factor-1 (SDF-1), and its receptor C-X-C chemokine receptor type 4 (CXCR4) were significantly increased in the MSC+EPO group compared with the EPO or MSCs group alone; moreover, EPO significantly enhanced MSCs proliferation, migration, and anti-apoptosis ability in vitro. Furthermore, the MSCs could differentiate into cells that were positive for the type II alveolar epithelial cell (AECII)-specific marker surfactant protein-C, but not positive for the AECI-specific marker aquaporin 5. Our present results suggested that MSCs in combination with EPO could significantly attenuate lung injury in a neonatal mouse model of BPD. The mechanism may be by the indirect promotion of angiogenesis, which may involve the SDF-1/CXCR4 axis.