Hypoxic-ischemic encephalopathy (HIE) is a diffuse brain tissue injury caused by acute ischemia and hypoxia, and it is most commonly found in newborn infants but can also occur in adults. Mesenchymal stem cell (MSC) therapies have showed improved outcomes for treating HIE-induced neuronal defects. However, many key issues associated with poor cell viability and tolerance of grafted MSCs after HIE remain to be resolved. Genetic engineering could endow MSCs with more robust regenerative capacities. Our research, along with that of other scientists, has found that the expression of intracellular erythropoietin (EPO) in human umbilical cord MSCs (hUC-MSCs) increases proportionally with the duration of hypoxia exposure. Furthermore, we observed that EPO, when introduced into the EPO gene-modified hUC-MSCs, can be secreted into the extracellular space. However, the underlying mechanisms that support the neuroprotective effects of EPO-MSCs remain unclear. EPO-MSCs, hUC-MSCs, and NC-MSCs were identified by flow cytometry, osteogenic, and adipogenic differentiation assays. The oxygen-glucose deprivation (OGD)-induced SH-SY5Y cell-line was established, and five groups were set up: control, 24-h ischemia-hypoxia, co-cultured with hUC-MSCs, NC-MSCs, and EPO-MSCs after hypoxia. LEGENDplex™ multi-factor flow cytometry was used to detect the secretion of inflammatory factors in cell supernatants and cerebrospinal fluid. Chromosome-targeted excision and tagging (CUT&Tag) sequencing was applied to detect genomic H3K4me2 modifications, and conjoint analysis with transcriptome sequencing (RNA-seq) was performed. Lentiviral vector infection was used to construct SH-SY5Y cells with stable knockdown of RE1-silencing transcription factor (REST), and flow cytometry was used to detect alterations in apoptosis. Finally, the molecular mechanism underlying the neuroprotective and anti-apoptotic effects of EPO-MSCs was investigated using RNA sequencing, qRT-PCR, and western blot assays. Our results suggest that EPO-MSCs are genetically engineered to secrete significantly more EPO. EPO-MSCs treatment has anti-apoptotic properties and offers neuronal protection during ischemic-hypoxic injury. Furthermore, RNA-seq results suggest that multiple inflammation-related genes were down-regulated after EPO-MSCs treatment. Application of RNA-seq and CUT&Tag combined analysis found that the expressions of REST were significantly up-regulated. Lentiviral vector infection to construct REST knockdown SH-SY5Y failed to rescue apoptosis after hypoxia and co-culture with EPO-MSCs, and SETD2-mediated H3K36me3 protein level expression was reduced. EPO-MSCs may promote neuronal survival by affecting H3K4me2 and thus activating the expression of REST and TET3. EPO-MSCs also upregulated the modification level of SETD2-mediated H3K36me3 and regulated the expression of inflammation-related genes such as PLCG2, as well as apoptosis genes BCL2A1. To investigate the neuroprotective effects of EPO-modified hUC-MSCs and the underlying epigenetic regulatory mechanisms, this study aims to provide a theoretical foundation for the potential application of EPO gene-modified hUC-MSCs in the treatment of HIE.