Mesenchymal stem cells (MSCs), a unique population of multipotent adult progenitor cells originally found in bone marrow (BM), are extremely useful for multifunctional therapeutic approaches. However, the growth arrest and premature senescence of MSCs in vitro prevent the in-depth characterization of these cells. In addition, the regulatory factors involved in MSCs migration remain largely unknown. Given that protein phosphorylation is associated with the processes of MSCs proliferation and migration, we focused on wild-type p53-inducible phosphatase-1 (Wip1), a well-studied modulator of phosphorylation, in this study. Our results showed that Wip1 knockout significantly inhibited MSCs proliferation and induced G2-phase cell-cycle arrest by reducing cyclinB1 expression. Compared with WT-MSCs, Wip1−/− MSCs displayed premature growth arrest after six passages in culture. Transwell and scratch assays revealed that Wip1−/− MSCs migrate more effectively than WT-MSCs. Moreover, the enhanced migratory response of Wip1−/− MSCs may be attributed to increases in the induction of Rac1-GTP activity, the pAKT/AKT ratio, the rearrangement of filamentous-actin (f-actin), and filopodia formation. Based on these results, we then examined the effect of treatment with a PI3K/AKT and Rac1 inhibitor, both of which impaired the migratory activity of MSCs. Therefore, we propose that the PI3K/AKT/Rac1 signaling axis mediates the Wip1 knockout-induced migration of MSCs. Our findings indicate that the principal function of Wip1 in MSCs transformation is the maintenance of proliferative capacity. Nevertheless, knocking out Wip1 increases the migratory capacity of MSCs. This dual effect of Wip1 provides the potential for purposeful routing of MSCs.