Bone marrow stem cells participate in tissue repair processes and may have a role in wound healing. Diabetes is characterised by delayed and poor wound healing. We investigated the potential of bone marrow-derived mesenchymal stromal cells (BMSCs) to promote healing of fascial wounds in diabetic rats. After manifestation of streptozotocin (STZ)-induced diabetic state for 5 weeks in male adult Sprague–Dawley rats, healing of fascial wounds was severely compromised. Compromised wound healing in diabetic rats was characterised by excessive polymorphonuclear cell infiltration, lack of granulation tissue formation, deficit of collagen and growth factor [transforming growth factor (TGF-β), epidermal growth factor (EGF), vascular endothelial growth factor (VEGF), platelet-derived growth factor PDGF-BB and keratinocyte growth factor (KGF)] expression in the wound tissue and significant decrease in biomechanical strength of wounds. Treatment with BMSC systemically or locally at the wound site improved the wound-breaking strength (WBS) of fascial wounds. The improvement in WBS was associated with an immediate and significant increase in collagen levels (types I–V) in the wound bed. In addition, treatment with BMSCs increased the expression of growth factors critical to proper repair and regeneration of the damaged tissue moderately (TGF-β, KGF) to markedly (EGF, VEGF, PDGF-BB). These data suggest that cell therapy with BMSCs has the potential to augment healing of the diabetic wounds.