Circulating endothelial progenitor cells (EPCs) contribute to neovascularization of ischemic tissues and repair of injured endothelium. The role of bone marrow-derived progenitor cells in hypoxia-induced pulmonary vascular remodeling and their tissue-engineering potential in pulmonary hypertension (PH) remain largely unknown. We studied endogenous mobilization and homing of EPCs in green fluorescent protein bone marrow chimeric mice exposed to chronic hypoxia, a common hallmark of PH. Despite increased peripheral mobilization, as shown by flow cytometry and EPC culture, bone marrow-derived endothelial cell recruitment in remodeling lung vessels was limited. Moreover, transfer of vascular endothelial growth factor receptor-2+/Sca-1+/CXCR-4+-cultured early-outgrowth EPCs failed to reverse PH, suggesting hypoxia-induced functional impairment of transferred EPCs. Chronic hypoxia decreased migration to stromal cell-derived factor-1alpha, adhesion to fibronectin, incorporation into a vascular network, and nitric oxide production (-41%, -29%, -30%, and -32%, respectively, vs. normoxic EPCs; p < .05 for all). The dysfunctional phenotype of hypoxic EPCs significantly impaired their neovascularization capacity in chronic hind limb ischemia, contrary to normoxic EPCs cultured in identical conditions. Mechanisms contributing to EPC dysfunction include reduced integrin alphav and beta1 expression, decreased mitochondrial membrane potential, and enhanced senescence. Novel insights from chronic hypoxia-induced EPC dysfunction may provide important cues for improved future cell repair strategies.