Because of their plasticity and availability, bone-marrow-derived mesenchymal stem cells (MSC) are a potential cell source for treating ischemic heart disease. Schwann cells (SC) play a critical role in neural remodeling and angiogenesis because of their secretion of cytokines such as vascular endothelial growth factor (VEGF). Cell microencapsulation, surrounding cells with a semipermeable polymeric membrane, is a promising tool to shelter cells from the recipient's immune system. We investigated whether transplantation of microencapsulated SC (MC-SC) and MSC together could improve heart function by augmenting angiogenesis in acute myocardial infarction (AMI). Sprague-Dawley rats with ligation of the left anterior descending artery to induce AMI were randomly divided for cell transplantation into four groups-MC-SC+MSC, MC+MSC, MSC, MC-SC, and controls. Echocardiography was performed at 3 days and 2 and 4 weeks after AMI. Rat hearts were harvested on day 28 after transplantation and examined by immunohistochemistry and western blot analysis. Echocardiography revealed differences among the groups in fractional shortening and end-systolic and end-diastolic dimensions (P < 0.05). The number of BrdU-positive cells was greater with MC-SC+MSC transplantation than the other groups (P < 0.01). The vessel density and VEGF level in the infarcted zone was significantly increased with MC-SC+MSC transplantation (P < 0.05). These results show that transplanting a combination of MC-SC and MSC could augment angiogenesis and improve heart function in AMI.