Transplantation of mesenchymal stem cells (MSCs) is a promising therapy for ischemic injury; however, inadequate survival of implanted cells in host tissue is a substantial impediment in the progress of cellular therapy. Secreted Frizzled-related protein 2 (sFRP2) has recently been highlighted as a key mediator of MSC-driven myocardial and wound repair. Notably, sFRP2 mediates significant enhancement of MSC engraftment in vivo. We hypothesized that sFRP2 improves MSC engraftment by modulating self-renewal through increasing stem cell survival and by inhibiting differentiation. In previous studies we demonstrated that sFRP2-expressing MSCs exhibited an increased proliferation rate. In the current study, we show that sFRP2 also decreased MSC apoptosis and inhibited both osteogenic and chondrogenic lineage commitment. sFRP2 activity occurred through the inhibition of both Wnt and bone morphogenic protein (BMP) signaling pathways. sFRP2-mediated inhibition of BMP signaling, as assessed by levels of pSMAD 1/5/8, was independent of its effects on the Wnt pathway. We further hypothesized that sFRP2 inhibition of MSC lineage commitment may reduce heterotopic osteogenic differentiation within the injured myocardium, a reported adverse side effect. Indeed, we found that sFRP2-MSC-treated hearts and wound tissue had less ectopic calcification. This work provides important new insight into the mechanisms by which sFRP2 increases MSC self-renewal leading to superior tissue engraftment and enhanced wound healing.