Objective To study the transplantation efficacy of neural stem cells (NSCs) and Schwarm cells (SC) in a rat model of spinal cord contusion injury. Methods Multipotent neural stem cells (NSCs) and Schwarm cells were harvested from the spinal cords of embryonic rats at 16 days post coitus and sciatic nerves of newborn rats, respectively. The differential characteristics of NSCs in vitro induced by either serum-based culture or co-culture with SC were analyzed by immurrofluorescence. NSCs and SCs were co-transplanted into adult rats having undergone spinal cord contusion at T9 level. The animals were weekly monitored using the Basso-Beattie-Bresnahan locomotor rating system to evaluate functional recovery from contusion-induced spinal cord injury. Migration and differentiation of transplanted NSCs were studied in tissue sections using immunohistochemical staining. Results Embryonic spinal cord-derived NSCs differentiated into a large number of oligodendrocytes in serum-based culture upon the withdrawal of mitogens. In cocultures with SCs, NSCs differentiated into neuron more readily. Rats with spinal cord contusion injury which had undergone transplantation of NSCs and SCs into the intraspinal cavity demonstrated a moderate improvement in motor functions. Conclusions SC may contribute to neuronal differentiation of NSCs in vitro and in vivo. Transplantation of NSCs and SCs into the affected area may be a feasible approach to promoting motor recovery in patients after spinal cord injury.