Neurogenesis occurs in dentate gyrus of adult hippocampus under the influence of various mitogenic factors. Growth factors besides instigating the proliferation of neuronal progenitor cells (NPCs) in dentate gyrus, also supports their differentiation to cholinergic neurons. In the present study, an attempt has been made to investigate the neurotrophic effect of bFGF in Kainic acid (KA) induced cognitive dysfunction in rats. Stereotaxic lesioning using (KA) was performed in hippocampal CA3 region of rat's brain. Four-weeks post lesioning rats were assessed for impairment in learning and memory using Y maze followed by bFGF infusion in dentate gyrus region. The recovery was evaluated after bFGF infusion using neurochemical, neurobehavioural and immunohistochemical approaches and compared with lesioned group. Significant impairment in learning and memory (P < 0.01) observed in lesioned animals, four weeks post lesioning exhibited significant restoration (P < 0.001) following bFGF infusion twice at one and four week post lesion. The bFGF infused animals exhibited recovery in hippocampus cholinergic (76%)/ dopaminergic (46%) receptor binding and enhanced Choline acetyltransferase (ChAT) immunoreactivity in CA3 region. The results suggest restorative potential of bFGF in cognitive dysfunctions, possibly due to mitogenic effect on dentate gyrus neurogenic area leading to generation and migration of newer cholinergic neurons.