Recent progress of stem cell biology gives us the hope for neural repair. We have established methods to specifically induce functional Schwann cells and neurons from bone marrow stromal cells (MSCs). The effectiveness of these induced cells was evaluated by grafting them either into peripheral nerve injury, spinal cord injury, or Parkinson' s disease animal models. MSCs-derived Schwann cells supported axonal regeneration and re-constructed myelin to facilitate the functional recovery in peripheral and spinal cord injury. MSCs-derived dopaminergic neurons integrated into host striatum and contributed to behavioral repair. In this review, we introduce the differentiation potential of MSCs and finally discuss about their benefits and drawbacks of these induction systems for cell-based therapy in neuro-traumatic and neuro-degenerative diseases.