The regenerative capacity of the olfactory system has generated interest in potential clinical application of cells from the olfactory epithelium in the treatment of neurodegenerative diseases. Experimental evidence from animal models and clinical studies suggest that transplantation of olfactory ensheathing cells (OEC), specialized glia in the olfactory system, may be therapeutically useful in neurodegenerative diseases such as spinal cord injury and stroke. This review article describes the different experimental approaches in OEC transplantation. We also discuss the possible effects of OEC implantation on the underlying pathophysiology in neurological disease, including neuroplasticity. Our recent study of this particular population of cells has disclosed some of the molecular basis of the regenerative mechanism of OECs. In summary OECs produce several neurotrophic factors such as stromal cell-derived factor 1alpha and brain-derived neurotrophic factor and enhance axonal regeneration to promote neuroplasticity in neurodegenerative diseases.