Unilateral ureteral obstruction (UUO), a model of tubulointerstitial scarring (TIS), has a propensity toward regeneration of renal parenchyma after release of obstruction (RUUO). No information exists on the contribution of stem cells to this process. We performed UUO in FVB/N mice, reversed it after 10 days, and examined kidneys 3 wk after RUUO. UUO resulted in attenuation of renal parenchyma. FACS analysis of endothelial progenitor (EPC), mesenchymal stem (MSC) and hematopoietic stem (HSC) cells obtained from UUO kidneys by collagenase-dispersed single-cell suspension showed significant increase in EPC, MSC, and HSC compared with control. After RUUO cortical parenchyma was nearly restored, and TIS score improved by 3 wk. This reversal process was associated with return of stem cells toward baseline level. When animals were chronically treated with nitric oxide synthase (NOS) inhibitor at a dose that did not induce hypertension but resulted in endothelial dysfunction, TIS scores were not different from control UUO, but EPC number in the kidney decreased significantly; however, parenchymal regeneration in these mice was similar to control. Blockade of CXCR4-mediated engraftment resulted in dramatic worsening of UUO and RUUO. Similar results were obtained in caveolin-1-deficient but not -overexpressing mice, reflecting the fact that activation of CXCR4 occurs in caveolae. The present data show increase in EPC, HSC, and MSC population during UUO and a tendency for these cells to decrease to control level during RUUO. These processes are minimally affected by chronic NOS inhibition. Blockade of CXCR4-stromal cell-derived factor-1 (SDF-1) interaction by AMD3100 or caveolin-1 deficiency significantly reduced the UUO-associated surge in stem cells and prevented parenchymal regeneration after RUUO. We conclude that the surge in stem cell accumulation during UUO is a prerequisite for regeneration of renal parenchyma.