Muscle homeostasis involves de novo myogenesis, as observed in conditions of acute or chronic muscle damage. Tumor Necrosis Factor (TNF) triggers skeletal muscle wasting in several pathological conditions and inhibits muscle regeneration. We show that intramuscular treatment with the myogenic factor Arg(8)-vasopressin (AVP) enhanced skeletal muscle regeneration and rescued the inhibitory effects of TNF on muscle regeneration. The functional analysis of regenerating muscle performance following TNF or AVP treatments revealed that these factors exerted opposite effects on muscle function. Principal component analysis showed that TNF and AVP mainly affect muscle tetanic force and fatigue. Importantly, AVP counteracted the effects of TNF on muscle function when delivered in combination with the latter. Muscle regeneration is, at least in part, regulated by caspase activation, and AVP abrogated TNF-dependent caspase activation. The contrasting effects of AVP and TNF in vivo are recapitulated in myogenic cell cultures, which express both PW1, a caspase activator, and Hsp70, a caspase inhibitor. We identified PW1 as a potential Hsp70 partner by screening for proteins interacting with PW1. Hsp70 and PW1 co-immunoprecipitated and co-localized in muscle cells. In vivo Hsp70 protein level was upregulated by AVP, and Hsp70 overexpression counteracted the TNF block of muscle regeneration. Our results show that AVP counteracts the effects of TNF through cross-talk at the Hsp70 level. Therefore, muscle regeneration, both in the absence and in the presence of cytokines may be enhanced by increasing Hsp70 expression.