Transient global cerebral ischaemia in rats causes relatively circumscribed and specific damage to the CA1 pyramidal cells of the dorsal hippocampus, along with a cognitive deficit manifest as difficulties in the performance of a range of spatial learning and memory tasks. Our previous studies have shown that restoration of behavioural performance in ischaemic rats by neural grafts taken relatively late in fetal development occurs only after local replacement of cells homotypic to those lost through the ischaemic insult. This lesion-plus-behaviour model therefore offers a powerful means for establishing whether multipotent embryonic neuroepithelial cells will engraft the damaged CA1, develop into appropriate neuronal phenotypes and produce behavioural recovery. Here we report that, in rats subjected to 15 min of global cerebral ischaemia, intrahippocampal implants of a conditionally immortal, multipotent cell line, directly derived from the embryonic day 14 hippocampal neuroepithelium of the H-2Kb-tsA58 transgenic mouse, selectively repopulated the lesioned CA1 pyramidal layer and restored ischaemia-induced deficits in acquisition of a hidden platform location in the Morris water maze.