We investigated whether irradiated brain-derived neurotropic factor (BDNF)-overexpressing engineered human mesenchymal stem cells (BDNF-eMSCs) improve paracrine efficiency and, thus, the beneficial potency of naïve MSCs against severe hypoxic ischemic (HI) brain injury in newborn rats. Irradiated BDNF-eMSCs hyper-secreted BDNF > 10 fold and were >5 fold more effective than naïve MSCs in attenuating the oxygen-glucose deprivation-induced increase in cytotoxicity, oxidative stress, and cell death in vitro. Only the irradiated BDNF-eMSCs, but not naïve MSCs, showed significant attenuating effects on severe neonatal HI-induced short-term brain injury scores, long-term progress of brain infarct, increased apoptotic cell death, astrogliosis and inflammatory responses, and impaired negative geotaxis and rotarod tests in vivo. Our data, showing better paracrine potency and the resultant better therapeutic efficacy of the irradiated BDNF-eMSCs, compared to naïve MSCs, suggest that MSCs transfected with the BDNF gene might represent a better, new therapeutic strategy against severe neonatal HI brain injury.