It has been hypothesized that mesenchymal stem cells (MSCs) home to sites of injury. Nevertheless, efficient delivery of MSCs to target organs and description of their ultimate fate remain major challenges. We provide evidence that intra-arterially (IA) injected MSCs selectively engraft from the circulation as perivascular cells in the bone marrow (BM) after a localized radiation injury. Luciferase-expressing MSCs, derived from a conditionally immortalized clone (BMC-9) representing a pure population of cells, were arterially delivered into mice irradiated in one leg. Cell distribution was measured by bioluminescent imaging and final destination assessed by luciferase immunolocalization. IA injections resulted in engraftment only in the irradiated leg where cells localize and proliferate abluminal to the BM vasculature, a phenomenon not replicated with intravenous injections or with IA injections of kidney cells harvested from the same donor used for MSCs. Furthermore, MSCs harvested from the engrafted marrow and serially transplanted retain the ability to selectively engraft at sites of injury. This study demonstrates that MSCs can serially engraft at sites of injury from the circulation, that they reside in the perivascular space, and that arterial delivery is more efficient than venous delivery for cell engraftment.