Temporal lobe epilepsy (TLE) is a major neurological disease, often associated with cognitive decline. Since approximately 30% of patients are resistant to antiepileptic drugs, TLE is being considered as a possible clinical target for alternative stem cell-based therapies. Given that insulin-like growth factor I (IGF-I) is neuroprotective following a number of experimental insults to the nervous system, we investigated the therapeutic potential of neural stem/precursor cells (NSCs) transduced, or not, with a lentiviral vector for overexpression of IGF-I after transplantation in a mouse model of kainic acid (KA)-induced hippocampal degeneration, which represents an animal model of TLE. Exposure of mice to the Morris water maze task revealed that unilateral intrahippocampal NSC transplantation significantly prevented the KA-induced cognitive decline. Moreover, NSC grafting protected against neurodegeneration at the cellular level, reduced astrogliosis, and maintained endogenous granule cell proliferation at normal levels. In some cases, as in the reduction of hippocampal cell loss and the reversal of the characteristic KA-induced granule cell dispersal, the beneficial effects of transplanted NSCs were manifested earlier and were more pronounced when these were transduced to express IGF-I. However, differences became less pronounced by 2 months postgrafting, since similar amounts of IGF-I were detected in the hippocampi of both groups of mice that received cell transplants. Grafted NSCs survived, migrated, and differentiated into neurons-including glutamatergic cells-and not glia, in the host hippocampus. Our results demonstrate that transplantation of IGF-I producing NSCs is neuroprotective and restores cognitive function following KA-induced hippocampal degeneration.