Endothelial progenitor cell (EPC) dysfunction is a key contributor to diabetic refractory wounds. Endothelial nitric oxide synthase (eNOS), which critically regulates the mobilization and function of EPCs, is uncoupled in diabetes due to decreased cofactor tetrahydrobiopterin (BH4). We tested whether GTP cyclohydrolase I (GTPCH I), the rate-limiting enzyme of BH4 synthesis, preserves EPC function in type 1 diabetic mice. Type 1 diabetes was induced in wild-type (WT) and GTPCH I transgenic (Tg-GCH) mice by intraperitoneal injection of streptozotocin (STZ). EPCs were isolated from the peripheral blood and bone marrow of WT, Tg-GCH, and GTPCH I-deficient hph-1 mice. The number of EPCs was significantly lower in STZ-WT mice and hph-1 mice, and was rescued in STZ Tg-GCH mice. Furthermore, GTPCH I overexpression improved impaired diabetic EPC migration and tube formation. EPCs from WT, Tg-GCH, and STZ-Tg-GCH mice were administered to diabetic excisional wounds, significantly accelerated wound healing, with a concomitant augmentation of angiogenesis. Flow cytometry measurements showed that intracellular nitric oxide (NO) levels were significantly reduced in STZ-WT mice and hph-1 mice, paralleled by increased superoxide anion level; both were rescued in STZ-Tg-GCH mice. Western blot analysis revealed that thrombospondin-1 (TSP-1) was significantly upregulated in the EPCs of STZ-WT mice and hph-1 mice, and suppressed in STZ-treated Tg-GCH mice. Our results demonstrate that the GTPCH I/BH4 pathway is critical to preserve EPC quantity, function, and regenerative capacity during wound healing in type 1 diabetic mice, at least partly, through the attenuation of superoxide and TSP-1 levels and augmentation of NO level.