Background: Healing of the tendon-bone interface (TBI) after rotator cuff injury is limited, often leading to scar-mediated repair. Decellularized tendon fibrocartilage–bone composite (dTFBC) and bone marrow mesenchymal stem cell sheets (BMSCS) improve repair in preclinical models, but full scaffold encapsulation with mechanical preconditioning remains unexplored. Purpose: To evaluate TBI regeneration using mechanically preconditioned, BMSCS-encapsulated dTFBC scaffolds in a rabbit model. Study Design: Controlled laboratory study. Methods: A total of 48 male New Zealand White rabbits were randomized into 4 groups (n = 12 each): (1) standard repair (control); (2) repair with dTFBC; (3) repair with dTFBC-BMSCS; and (4) repair with mechanically preconditioned dTFBC-BMSCS (mdTFBC-BMSCS). Healing at 12 weeks was assessed via gross observation, histomorphological and immunohistochemical analyses, and biomechanical testing. Results: The mdTFBC-BMSCS group demonstrated a higher ultimate failure load (mean, 203.9 ± 65.6 N) than both the control (118 ± 37.4 N; P = .003) and dTFBC groups (127 ± 44.1 N; P = .008), with no significant difference between the 2 BMSCS-treated groups. Histological analysis revealed enhanced fibrocartilage formation, improved collagen fiber organization, and reduced inflammation infiltration at the TBI in the mdTFBC-BMSCS group. Immunohistochemical analysis showed greater collagen type 2 alpha 1 chain-, interleukin 10-, and arginase 1-positive areas in the mdTFBC-BMSCS group than in the control and dTFBC groups. Conclusion: Mechanically preconditioned, fully BMSCS-encapsulated dTFBC scaffolds promoted TBI regeneration, with enhanced cellular integration, fibrocartilage formation, and favorable biomechanical performance. Clinical Relevance: This biomimetic scaffold strategy may enhance biological healing and reduce the risk of retear after rotator cuff repair.