The discovery of bone marrow–derived endothelial progenitors in the peripheral blood has promoted intensive studies on the potential of cell therapy for various human diseases. Accumulating evidence has suggested that implantation of bone marrow mononuclear cells effectively promotes neovascularization in ischemic tissues. It has also been reported that the implanted cells are incorporated not only into the newly formed vessels but also secrete angiogenic factors. However, the mechanism by which cell therapy improves tissue ischemia remains obscure. We enrolled 29 “no-option” patients with critical limb ischemia and treated ischemic limbs by implantation of peripheral mononuclear cells. Cell therapy using peripheral mononuclear cells was very effective for the treatment of limb ischemia, and its efficacy was associated with increases in the plasma levels of angiogenic factors, in particular interleukin-1β (IL-1β). We then examined an experimental model of limb ischemia using IL-1β–deficient mice. Implantation of IL-1β–deficient mononuclear cells improved tissue ischemia as efficiently as that of wild-type cells. Both wild-type and IL-1β–deficient mononuclear cells increased expression of IL-1β and thus induced angiogenic factors in muscle cells of ischemic limbs to a similar extent. In contrast, inability of muscle cells to secrete IL-1β markedly reduces induction of angiogenic factors and impairs neovascularization by cell implantation. Implanted cells do not secret angiogenic factors sufficient for neovascularization but, instead, stimulate muscle cells to produce angiogenic factors, thereby promoting neovascularization in ischemic tissues. Further studies will allow us to develop more effective treatments for ischemic vascular disease.