Mesenchymal stem cell (MSC)-based transplantation is a promising therapeutic approach for bone regeneration and repair. In the realm of therapeutic bone regeneration, the defect or injured tissues are frequently inflamed with an abnormal expression of inflammatory mediators. Growing evidence suggests that proinflammatory cytokines inhibit osteogenic differentiation and bone formation. Thus, for successful MSC-mediated repair, it is important to overcome the inflammation-mediated inhibition of tissue regeneration. In this study, using genetic and chemical approaches, we found that proinflammatory cytokines TNF and IL-17 stimulated I kappa B kinase (IKK)-NF-kappa B and impaired osteogenic differentiation of MSCs. In contrast, the inhibition of IKK-NF-kappa B significantly enhanced MSC-mediated bone formation. Mechanistically, we found that IKK-NF-kappa B activation promoted beta-catenin ubiquitination and degradation through induction of Smurf1 and Smurf2. To translate our basic findings to potential clinic applications, we showed that the IKK small molecule inhibitor, IKKVI, enhanced osteogenic differentiation of MSCs. More importantly, the delivery of IKKVI promoted MSC-mediated craniofacial bone regeneration and repair in vivo. Considering the well established role of NF-kappa B in inflammation and infection, our results suggest that targeting IKK-NF-kappa B may have dual benefits in enhancing bone regeneration and repair and inhibiting inflammation, and this concept may also have applicability in many other tissue regeneration situations.