Acute Tubular Necrosis (ATN) causes severe damage to the kidney epithelial tubular cells and is often associated with severe renal dysfunction. Stem-cell based therapies may provide alternative approaches to treating of ATN. We have previously shown that clonal c-kit(pos) stem cells, derived from human amniotic fluid (hAFSC) can be induced to a renal fate in an ex-vivo system. Herein, we show for the first time the successful therapeutic application of hAFSC in a mouse model with glycerol-induced rhabdomyolysis and ATN. When injected into the damaged kidney, luciferase-labeled hAFSC can be tracked using bioluminescence. Moreover, we show that hAFSC provide a protective effect, ameliorating ATN in the acute injury phase as reflected by decreased creatinine and BUN blood levels and by a decrease in the number of damaged tubules and apoptosis therein, as well as by promoting proliferation of tubular epithelial cells. We show significant immunomodulatory effects of hAFSC, over the course of ATN. We therefore speculate that AFSC could represent a novel source of stem cells that may function to modulate the kidney immune milieu in renal failure caused by ATN.