Recent reports have highlighted the potential therapeutic role of olfactory ensheathing cells for repair of spinal cord injuries. Previously ensheathing cells collected from the olfactory bulbs within the skull were used. In humans a source of these cells for autologous therapy lies in the nasal mucosa where they accompany the axons of the olfactory neurons. The aim of the present study was to test the therapeutic potential of nasal olfactory ensheathing cells for spinal cord repair. Olfactory ensheathing cells cultured from the olfactory lamina propria or pieces of lamina propria from the olfactory mucosa were transplanted into the transected spinal cord. Three to ten weeks later these animals partially recovered movement of their hind limbs and joints which was abolished by a second spinal cord transection. Control rats, receiving collagen matrix, respiratory lamina propria or culture medium, did not recover hind limb movement. Recovery of movement was associated with recovery of spinal reflex circuitry, assessed using the rate-sensitive depression of the H-reflex from an interosseous muscle. Histological analysis of spinal cords grafted with olfactory tissue demonstrated nerve fibres passing through the transection site, serotonin-positive fibres in the spinal cord distal to the transection site, and retrograde labelling of brainstem raphe and gigantocellularis neurons from injections into the distal cord, indicating regeneration of descending pathways. Thus, olfactory lamina propria transplantation promoted partial restoration of function after relatively short recovery periods. This study is particularly significance because it suggests an accessible source of tissue for autologous grafting in human paraplegia.