Induced pluripotent stem cells (iPSCs) hold great potential for cell therapy and tissue engineering. Neural crest stem cells (NCSCs) are multipotent that are capable of differentiating into mesenchymal lineages. In this study, we investigated whether iPSC-derived NCSCs (iPSC-NCSCs) have potential for tendon repair. Human iPSC-NCSCs were suspended in fibrin gel and transplanted into a rat patellar tendon window defect. At 4 weeks post-transplantation, macroscopical observation showed that the repair of iPSC-NCSC-treated tendons was superior to that of non-iPSC-NCSC-treated tendons. Histological and mechanical examinations revealed that iPSC-NCSCs treatment significantly enhanced tendon healing as indicated by the improvement in matrix synthesis and mechanical properties. Furthermore, transplanted iPSC-NCSCs produced fetal tendon-related matrix proteins, stem cell recruitment factors, and tenogenic differentiation factors, and accelerated the host endogenous repair process. This study demonstrates a potential strategy of employing iPSC-derived NCSCs for tendon tissue engineering.