Neuro-rehabilitation is based on the concept that training recruits the remaining neuronal systems to compensate for partial injury of the CNS. However, the neuronal basis of such take-over mechanism is poorly understood. As an experimental model of functional compensation after injury, we are studying the functional recovery after lesion of the direct cortico-motoneuronal (CM) pathway in macaque monkeys. It has been generally believed that direct CM pathway is essential for the control of independent control of individual fingers, such as precision grip. However, recent studies from our group have demonstrated the existence of a disynaptic excitatory CM pathway in macaque monkeys, which is mediated by propriospinal neurons in the C3-C4 segments (C3-C4 PNs). To investigate the possible function of the indirect pathway via the C3-C4 PNs, performance of reaching and grasping movements was tested in monkeys with lesion of the direct pathway by transection of the dorsolateral funiculus of the spinal cord at the border between C4 and C5 segments. Interestingly, the ability of precision grip recovered in a few weeks to 1-3 months after the lesion, which suggested that the indirect CM pathway can mediate the command for dexterous finger movements. We have found that the functional recovery is accompanied by enhanced signal transmission in the indirect CM pathway, presumably at the spinal level. Based on these experimental evidence, the neural substrate for functional compensation will be discussed.