Spinal cord trauma is associated not only with loss of nerve cells and fibers but also with damage to oligodendrocytes and demyelination. In order to assess the potential of transplanted oligodendrocyte-lineage cells to repair the demyelination that follows spinal cord injury, we have used donor glia derived from a transgenic mouse line containing the LacZ transgene under control of the myelin basic protein promoter. Glia derived from fetal or neonatal transgenic mice were injected into the spinal cords of immunosuppressed adult rats at the site of an experimental traumatic lesion 1-16 days after injury. Cells expressing LacZ were identified 15-18 days later in cryosections rostral and caudal to the transplant site, most conspicuously within white matter defects. Some of these cells within the dorsal columns gave rise to approximately 30- to 60-microns processes, consistent with myelin segments, which are oriented parallel to the fiber tract. Glial transplantation may thus be a feasible means of replacing damaged host oligodendrocytes with donor oligodendrocyte-lineage cells capable of reforming myelin and potentially restoring functional lost as a result of demyelination associated with spinal cord injury.