Pluripotent embryonic stem (ES) cells have emerged as a powerful tool for disease modeling and neural regeneration. Transplantation studies in rodents indicate that ES cell-derived glial precursors (ESGPs) efficiently restore myelin in dysmyelinating mutants and chemically induced foci of myelin loss. Here we explore the myelination potential of ESGPs in an antibody/complement-induced demyelination model. Microinjection of an antibody to myelin oligodendrocyte glycoprotein (MOG) and complement was employed to generate circumscribed areas of demyelination in the adult rat spinal cord. ESGPs transplanted into 2-day-old lesions were found to survive and differentiate into both oligodendrocytes and astrocytes. The engrafted cells remained largely confined to the lesion site and showed no evidence of tumor formation up until 4 weeks after transplantation. Within areas of pronounced microglial activation and macrophage extravasation, engrafted ES cell-derived oligodendrocytes contacted and enwrapped host axons and alongside endogenous glia, contributed to the formation of new myelin sheaths. These findings demonstrate that ESGPs transplanted into acutely demyelinated lesions can contribute to myelin repair.