Apoptosis and necrosis of intestinal epithelial cells (IECs), induced by ischemia-reperfusion (I/R) injury, can lead to dysfunction of the intestinal barrier, which could cause multiple organ dysfunction syndromes. Mesenchymal stem cells (MSCs) have the potential of providing protective effects on damaged IECs via paracrine action. This study investigated whether hypoxia can enhance the protective effect of placental-derived MSCs (pMSCs) on H2O2-treated-caco2 cells, and explored the possible mechanism. The pMSCs isolated by tissue culture were fibroblast-like, positive for CD73, CD90 and CD105 and can differentiate into chondrocytes and endothelial cells. Five days after treatment with H2O2, the numbers of living caco2 cells significantly decreased. More live H2O2-treated-caco2 cells were observed in pMSCs hypoxia culture medium (pMSCs-HCM) than pMSCs normoxia culture medium (pMSCs-NCM), and the application of a specific antibody that blocked insulin-like growth factor-1 (IGF-1) leads to a significant decrease of the protective effect of pMSCs-HCM. Hypoxia can promote IGF-1 expression of pMSCs at mRNA and protein levels, and caco2 stably expressed IGF-1 receptor. Knocking down IGF-1 expression in pMSCs by siRNA resulted in a significant attenuation of the increase in apoptosis of H2O2-treated-caco2 cultured in pMSCs-HCM. In conclusion, hypoxia can increase the protective effect of pMSCs on H2O2-treated-caco2 cells via a promotion of their paracrine actions, and the key cytokine involved is IGF-1.