Demyelination contributes to the physiological and behavioral deficits after contusive spinal cord injury (SCI). Therefore, remyelination may be an important strategy to facilitate repair after SCI. We show here that rat embryonic day 14 spinal cord-derived glial-restricted precursor cells (GRPs), which differentiate into both oligodendrocytes and astrocytes, formed normal-appearing central myelin around axons of cultured DRG neurons and had enhanced proliferation and survival in the presence of neurotrophin 3 (NT3) and brain-derived neurotrophin factor (BDNF). We infected GRPs with retroviruses expressing the multineurotrophin D15A (with both BDNF and NT3 activities) and then transplanted them into the contused adult thoracic spinal cord at 9 d after injury. Expression of D15A in the injured spinal cord is five times higher in animals receiving D15A-GRP grafts than ones receiving enhanced green fluorescent protein (EGFP)-GRP or DMEM grafts. Six weeks after transplantation, the grafted GRPs differentiated into mature oligodendrocytes expressing both myelin basic protein (MBP) and adenomatus polyposis coli (APC). Ultrastructural analysis showed that the grafted GRPs formed morphologically normal-appearing myelin sheaths around the axons in the ventrolateral funiculus (VLF) of spinal cord. Expression of D15A significantly increased the percentage of APC+ oligodendrocytes of grafted GRPs (15-30%). Most importantly, 8 of 12 rats receiving grafts of D15A-GRPs recovered transcranial magnetic motor-evoked potential responses, indicating that conduction through the demyelinated VLF axons was restored. Such electrophysiological recovery was not observed in rats receiving grafts of EGFP-GRPs, D15A-NIH3T3 cells, or an injection of an adenovirus expressing D15A. Recovery of hindlimb locomotor function was also significantly enhanced only in the D15A-GRP-grafted animals at 4 and 5 weeks after transplantation. Therefore, combined treatment with neurotrophins and GRP grafts can facilitate functional recovery after traumatic SCI and may prove to be a useful therapeutic strategy to repair the injured spinal cord.