Background. Pulmonary emphysema is characterized by loss of alveolar structures. We have found that bone marrow (BM) mesenchymal stem cell (MSC) transplantation ameliorates papain-induced pulmonary emphysema. However, the underlying mechanism is not completely understood. It has been shown that blocking the vascular endothelial growth factor (VEGF) signaling pathway leads to apoptosis of lung cells and pulmonary emphysema, and MSC are capable of secreting VEGF. We hypothesized that MSC transplantation may have a protective effect on pulmonary emphysema by increasing VEGF-A expression and inhibiting apoptosis of lung cells. Methods. We examined the morphology and expression of VEGF-A in rat lung after papain treatment and MSC transplantation. We also used a co-culture system in which MSC and cells prepared from papain-treated lungs or control lungs were cultured together. The levels of VEGF-A in cells and culture medium were determined, and apoptosis of cultured lung cells was evaluated. Results. VEGF-A expression in rat lungs was decreased after papain treatment, which was partly rescued by MSC transplantation. MSC production of VEGF-A was increased when MSC were co-cultured with cells prepared from papain-treated lungs. Furthermore, the apoptosis of papain-treated lung cells was inhibited when co-cultured with MSC. The induction of MSC production of VEGF-A by papain-treated lung cells was inhibited by adding anti-rumor necrosis factor (TNF)-alpha antibody to the medium. Conclusions. The protective effect of MSC transplantation on pulmonary emphysema may be partly mediated by increasing VEGF-A expression and inhibiting the apoptosis of lung cells. TNF-alpha released from papain-treated lung cells induces MSC to secret VEGF-A.