Three-dimensional (3D) gelatin sponge (GS) scaffolds were constructed by ensheathing GS with a thin film of poly-(lactide-co-glycolide) (PLGA). Rat bone marrow-derived mesenchymal stem cells (MSCs) were isolated, cultured, and then seeded to the scaffolds. Distribution of cells and cell growth, survival, and proliferation within the scaffolds were then determined. Immunofluorescence and Western blot analysis were employed to detect the deposition of fibronectin to the scaffolds on day 3 and day 7 of culture. Scaffolds with or without MSCs were then transplanted into the transected rat spinal cord. One or 8 weeks following transplantation, cavity areas, activated macrophages/microglia, expression of TNF-α and IL-1β, and neovascularization within the grafts were examined and quantified. Deposition of fibronectin (FN) and expression of vascular endothelial growth factor (VEGF) and hypoxia-inducible factor-1α (HIF-1α) as potential inducing factors for angiogenesis were also examined. Results showed that 3D GS scaffolds allowed MSCs to adhere, survive, and proliferate and also FN to deposit. In vivo transplantation experiments demonstrated that these scaffolds were biocompatible, and MSCs seeded to the scaffolds played an important role in attenuating inflammation, promoting angiogenesis, and reducing cavity formation. Therefore, the GS scaffolds with MSCs may serve as promising supporting transplants for repairing spinal cord injury.