Purpose: Mesenchymal stem cells (MSCs) transplantation has been shown to be beneficial in treating neonatal hypoxic-ischemic (HI) brain injury. But as naïve MSC transplantation showed only modest therapeutic effects, some genetic modification of MSCs has been considered to enhance their outcome. This study examined the therapeutic potential of MSCs overexpressing glial cell-line derived neurotrophic factor (GDNF), which is known as a potent neuroprotective agent in ischemic brain. Methods: Human umbilical cord-derived mesenchymal stem cells (hUC-MSCs) were isolated from Wharton’s jelly and cultured in vitro. The hUC-MSCs were transfected with adenoviral vectors encoding GDNF or GFP (GDNF-MSCs or GFP-MSCs). Tetrameric cell permeable peptides (CPPs) were added during viral transfection to enhance the efficacy. The effects of GDNF-MSCs on neuronal survival and neurite outgrowth were assessed in vitro. And GDNF-MSCs or GFP-MSCs were transplanted into neonatal mouse brain with HI injury. Animal behavioral changes were evaluated using neurological and cylinder tests. Infarction volume, apoptosis, neurogenesis, gliogenesis were assessed via immunohistochemistry. Results: Using tetrameric CPP, the efficient gene transduction of hUC-MSCs by adenovirus was shown at 15 fold lower concentration of virus. GDNF-MSC-transplanted mice demonstrated significantly decreased infarction volume and improved neurological function as compared with vehicle- or GFP-MSC-injected transplanted ones. GDNF-MSC transplantation reduced cellular apoptosis after HI brain injury but increased neurogenesis and gliogenesis. GDNF-MSC-derived conditioned medium treatment to SH-SY5Y cells showed better neurite outgrowth and neuronal survival than the treatment with GFP-MSC-derived conditioned medium in vitro. Conclusion: These results suggest that GDNF-overexpressing hUC-MSC transplantation could be more advantageous for treating neonatal HI brain injury.