Mesenchymal stem cells can be expanded rapidly in vitro and differentiated into multiple mesodermal cell types. In addition, their differentiation into neuron-like cells expressing markers typical for mature neurons has been reported. We isolated human adipose tissue stromal cells (hATSCs) from human liposuction tissues and induced neural differentiation with azacytidine. Following neural induction, hATSCs changed toward neural morphology and displayed expression of MAP2 and GFAP. hATSCs, which were labeled with LacZ adenovirus, were injected into the lateral ventricle of the rat brain. Transplanted cells migrated to various parts of the brain, and ischemic brain injury by middle cerebral artery occlusion (MCAo) increased their migration to the injured cortex. Some of the transplanted cells expressed MAP2 and GFAP. Transplantation of hATSCs improved functional deficits in ischemic brain injury induced by MCAo. Intracerebral grafting of BDNF-transduced hATSCs significantly improved motor recovery of functional deficits in MCAo rats. These data indicate that transplanted hATSCs survive, migrate, and improve functional recovery after stroke and that genetically engineered hATSCs can express biologically active gene products and, therefore, can function as effective vehicles for therapeutic gene transfer to the brain.