There is a need for improved therapy for acquired brain injury, which has proven resistant to treatment by numerous drugs in clinical trials and continues to represent one of the leading causes of disability worldwide. Research into cell-based therapies for the treatment of brain injury is growing rapidly, but the ideal cell source has yet to be determined. Subpopulations of cells found in amniotic fluid, which is readily obtained during routine amniocentesis, can be easily expanded in culture, have multipotent differentiation capacity, are non-tumourigenic, and avoid the ethical complications associated with embryonic stem cells, making them a promising cell source for therapeutic purposes. Beneficial effects of amniotic fluid cell transplantation have been reported in various models of nervous system injury. However, evidence that amniotic fluid cells can differentiate into mature, functional neurons in vivo and incorporate into the existing circuitry to replace lost or damaged neurons is lacking. The mechanisms by which amniotic fluid cells improve outcomes after experimental nervous system injury remain unclear. However, studies reporting the expression and release of neurotrophic, angiogenic, and immunomodulatory factors by amniotic fluid cells suggest they may provide neuroprotection and (or) stimulate endogenous repair and remodelling processes in the injured nervous system. In this paper, we address recent research related to the neuronal differentiation of amniotic fluid-derived cells, the therapeutic efficacy of these cells in animal models of nervous system injury, and the possible mechanisms mediating the positive outcomes achieved by amniotic fluid cell transplantation.