Stem cell injections are an attractive therapeutic tool. It has been demonstrated that injected stem cells promote tissue repair and regeneration via paracrine mechanisms. However, the effects of injected stem cells continue for far longer than they are present. We hypothesized that the effects of injected stem cells are prolonged because of a sequential paracrine relay mechanism. Conditioned media was collected from mesenchymal stem cells (MSCs) after 24 h. This media was then added to RAW264.7. Media was collected from the macrophages after 24 h and was then added to endothelial cells (ECs). This conditioned macrophage media, but not control media, promoted wound healing and induced EC differentiation. Similar results were observed with primary macrophages. To identify the active paracrine factors released by macrophages in response to stimulation by MSC conditioned media we used an antibody array, identifying increased expression of the angiogenesis-related proteins stromal cell-derived factor 1 (SDF1) and plasminogen activator inhibitor-1 (PAI-1). Knockdown of either protein inhibited the ability of conditioned media derived from MSC paracrine factor-stimulated macrophages to induce EC differentiation both in vitro and in vivo. Conditioned media derived from postnatal day 7 (P7) mouse macrophages induced EC differentiation. Moreover, SDF1 and PAI-1 levels were >120 higher in P7 macrophages compared with adult macrophages, suggesting that MSC paracrine factors promote adult macrophages to adopt a juvenile phenotype. These results indicate that MSC paracrine factors induce macrophages to secrete SDF1 and PAI-1, in-turn inducing endothelial cells to differentiate. Identification of a sequential paracrine mechanism opens new therapeutic avenues for stem cell therapy.