Inhibition of the inhibitor of kappa B kinase (IKK)/nuclear factor-kappa B (NF-κB) pathway enhances muscle regeneration in injured and diseased skeletal muscle, but it is unclear exactly how this pathway contributes to the regeneration process. In this study, we examined the role of NF-κB in regulating the proliferation and differentiation of muscle-derived stem cells (MDSCs). MDSCs isolated from the skeletal muscles of p65/-mice (haploinsufficient for the p65 subunit of NF-κB) had enhanced proliferation and myogenic differentiation compared to MDSCs isolated from wild-type (wt) littermates. In addition, selective pharmacological inhibition of IKKΒ, an upstream activator of NF-κB, enhanced wt MDSC differentiation into myotubes in vitro. The p65/-MDSCs also displayed a higher muscle regeneration index than wt MDSCs following implantation into adult mice with muscular dystrophy. Additionally, using a muscle injury model, we observed that p65/-MDSC engraftments were associated with reduced inflammation and necrosis. These results suggest that inhibition of the IKK/NF-κB pathway represents an effective approach to improve the myogenic regenerative potential of MDSCs and possibly other adult stem cell populations. Moreover, our results suggest that the improved muscle regeneration observed following inhibition of IKK/NF-κB, is mediated, at least in part, through enhanced stem cell proliferation and myogenic potential.