Stem cells are self-renewing, pluripotent cells that can be manipulated in vitro to differentiate into virtually any cell type. Stem cells are highly proliferative and have the potential to expand into very large numbers of a desired cell lineage. As such, they represent an excellent source of cells for cellular replacement strategies in disease states that are typified by a loss of a particular cell population. Recent studies have indicated that spinal cord injury is accompanied by chronic progressive demyelination, and have thus identified oligodendrocytes as a desirable transplant population for remyelination strategies. To address this need, we developed a method to differentiate hESCs into high purity human oligodendrocyte progenitor cells (OPCs). Transplantation into spinal cord injury sites in adult rats resulted in remyelination and functional repair. Here, we summarize these findings and present new data concerning the effects of hESC-derived OPC transplantation on the host environment.