Transplantation of mesenchymal stem cells (MSCs) derived from bone marrow has been shown to improve functional outcome in spinal cord injury (SCI). We transplanted MSCs derived from human bone marrow (hMSCs) to study their potential therapeutic effect in SCI in the rat. In addition to hMSCs, we used gene-modified hMSCs to secrete brain-derived neurotrophic factor (BDNF-hMSCs). After a dorsal transection lesion was induced at T9, cells were microinjected on each side of the transection site. Fluorogold (FG) was injected into the epicenter of the lesion cavity to identify transected corticospinal tract (CST) neurons. At 5 weeks after transplantation, the animals were perfused. Locomotor recovery improvement was observed for the BDNF-hMSC group, but not in the hMSC group. Structurally there was increased sprouting of injured corticospinal tract and serotonergic projections after hMSC and BDNF-hMSC transplantation. Moreover, an increased number of serotonergic fibers was observed in spinal gray matter including the ventral horn at and below the level of the lesion, indicating increased innervation in the terminal regions of a descending projection important for locomotion. Stereological quantification was performed on the brains to determine neuronal density in primary motor (M1) cortex. The number of FG backfilled cells demonstrated an increased cell survival of CST neurons in M1 cortex in both the hMSC and BDNF-hMSC groups at 5 weeks, but the increase for the BDNF-hMSC group was greater. These results indicate that transplantation of hMSCs hypersecreting BDNF results in structural changes in brain and spinal cord, which are associated with improved functional outcome in acute SCI.