Mesenchymal stem cells (MSC) have a therapeutic potential in patients with fractures to reduce the time of healing and treat nonunions. The use of MSC to treat fractures is attractive for several reasons. First, MSCs would be implementing conventional reparative process that seems to be defective or protracted. Secondly, the effects of MSCs treatment would be needed only for relatively brief duration of reparation. However, an integrated approach to define the multiple regenerative contributions of MSC to the fracture repair process is necessary before clinical trials are initiated. In this study, using a stabilized tibia fracture mouse model, we determined the dynamic migration of transplanted MSC to the fracture site, their contributions to the repair process initiation, and their role in modulating the injury-related inflammatory responses. Using MSC expressing luciferase, we determined by bioluminescence imaging that the MSC migration at the fracture site is time- and dose-dependent and, it is exclusively CXCR4-dependent. MSC improved the fracture healing affecting the callus biomechanical properties and such improvement correlated with an increase in cartilage and bone content, and changes in callus morphology as determined by micro-computed tomography and histological studies. Transplanting CMV-Cre-R26R-Lac Z-MSC, we found that MSCs engrafted within the callus endosteal niche. Using MSCs from BMP-2-Lac Z mice genetically modified using a bacterial artificial chromosome system to be beta-gal reporters for bone morphogenic protein 2 (BMP-2) expression, we found that MSCs contributed to the callus initiation by expressing BMP-2. The knowledge of the multiple MSC regenerative abilities in fracture healing will allow design of novel MSC-based therapies to treat fractures.