Mesenchymal stem cells (MSCs) have demonstrated a measurable therapeutic effect following transplantation into animal models of spinal cord injury. However, the mechanism(s) by which transplanted cells promote nerve regeneration and/or functional recovery remains indeterminate. Several studies have suggested that MSCs promote tissue repair via secretion of trophic factors, but delineating the effect of such factors is difficult due to the complexity of the in vivo systems. Therefore, we developed an organotypic spinal cord slice culture system that can be sustained for sufficient periods of time in vitro to evaluate nerve regeneration as an ex vivo model of spinal cord injury. Using this model, we demonstrate that treatment of lumbar slices of spinal cord with lysolecithin induced a significant degree of cell death and demyelination of nerve fibers, but that these effects were ameliorated to a significant extent following co-culture of slices with human MSCs (hMSCs). The results indicate that transplanted hMSCs alter the tissue microenvironment in a way that promotes survival of endogenous cells, including injured neurons, immature oligodendrocytes and oligodendrocyte progenitor cells. This ex vivo culture system represents a useful tool to further dissect the mechanism(s) by which MSCs promote regeneration of injured nervous tissue.