Neuropathic pain following spinal cord injury (SCI) is a devastating disease characterized by spontaneous pain such as hyperalgesia and allodynia. In this study, we investigated the therapeutic potential of ESC-derived spinal GABAergic neurons to treat neuropathic pain in a SCI rat model. Mouse embryonic stem cell-derived neural precursor cells (mESC-NPCs) were cultured in media supplemented with sonic hedgehog (SHH) and retinoic acid (RA) and efficiently differentiated into GABAergic neurons. Interestingly, low doses of SHH and RA induced MGE-like progenitors, which expressed low levels of DARPP32 and Nkx2.1 and high levels of Irx3 and Pax6. These cells subsequently generated the majority of the DARPP32(-) GABAergic neurons after in vitro differentiation. The spinal mESC-NPCs were intrathecally transplanted into the lesion area of the spinal cord around T10-T11 at 21 days after SCI. The engrafted spinal GABAergic neurons remarkably increased both the paw withdrawal threshold (PWT) below the level of the lesion and the vocalization threshold (VT) to the level of the lesion (T12, T11, and T10 vertebrae), which indicates attenuation of chronic neuropathic pain by the spinal GABAergic neurons. The transplanted cells were positive for GABA antibody staining in the injured region, and cells migrated to the injured spinal site and survived for more than 7 weeks in L4-L5. The mESC-NPC-derived spinal GABAergic neurons dramatically attenuated the chronic neuropathic pain following SCI, suggesting that the spinal GABAergic mESC-NPCs cultured with low doses of SHH and RA could be alternative cell sources for treatment of SCI neuropathic pain by stem cell-based therapies.