We have investigated the potential of human pluripotent cells to restore function in rats paralyzed with a virus-induced motor neuronopathy. Cells derived from embryonic germ cells, termed embryoid body-derived (EBD) cells, introduced into the CSF were distributed extensively over the rostrocaudal length of the spinal cord and migrated into the spinal cord parenchyma in paralyzed, but not uninjured, animals. Some of the transplanted human cells expressed the neuroglial progenitor marker nestin, whereas others expressed immunohistochemical markers characteristic of astrocytes or mature neurons. Rare transplanted cells developed immunoreactivity to choline acetyltransferase (ChAT) and sent axons into the sciatic nerve as detected by retrograde labeling. Paralyzed animals transplanted with EBD cells partially recovered motor function 12 and 24 weeks after transplantation, whereas control animals remained paralyzed. Semi-quantitative analysis revealed that the efficiency of neuronal differentiation and extension of neurites could not account for the functional recovery. Rather, transplanted EBD cells protected host neurons from death and facilitated reafferentation of motor neuron cell bodies. In vitro, EBD cells secrete transforming growth factor-α (TGF-α) and brain-derived neurotrophic factor (BDNF). Neutralizing antibodies to TGF-α and to BDNF abrogated the ability of EBD-conditioned media to sustain motor neuron survival in culture, whereas neutralizing antibodies to BDNF eliminated the axonal outgrowth from spinal organotypics observed with direct coculture of EBD cells. We conclude that cells derived from human pluripotent stem cells have the capacity to restore neurologic function in animals with diffuse motor neuron disease via enhancement of host neuron survival and function.