Central nervous system injuries are accompanied by scar formation. It has been difficult to delineate the precise role of the scar, as it is made by several different cell types, which may limit the damage but also inhibit axonal regrowth. We show that scarring by neural stem cell-derived astrocytes is required to restrict secondary enlargement of the lesion and further axonal loss after spinal cord injury. Moreover, neural stem cell progeny exerts a neurotrophic effect required for survival of neurons adjacent to the lesion. One distinct component of the glial scar, deriving from resident neural stem cells, is required for maintaining the integrity of the injured spinal cord.