Human embryonic stem cells (hESCs) are ideal seed cells for tissue regeneration, but no research has yet been reported concerning their potential for tendon regeneration. This study investigated the strategy and efficacy of using hESCs for tendon regeneration as well as the mechanism involved. hESCs were first induced to differentiate into mesenchymal stem cells (MSCs), which had the potential to differentiate into the three mesenchymal lineages and were positive for MSC surface markers. hESC-derived MSCs (hESC-MSCs) regenerated tendon tissues in both an in vitro tissue engineering model and an in vivo ectopic tendon regeneration model, as confirmed by the expression of tendon-specific genes and structure. In in-situ rat patellar tendon repair, tendon treated with hESC-MSCs had much better structural and mechanical properties than did controls. Furthermore, hESC-MSCs remained viable at the tendon wound site for at least 4 weeks and secreted human fetal tendon-specific matrix components and differentiation factors, which then activated the endogenous regeneration process in tendon. Moreover, no teratoma was found in any samples. These findings demonstrate a safe and practical strategy of applying ESCs for tendon regeneration and may assist in future strategies to treat tendon diseases. © AlphaMed Press.