As a potentially unlimited autologous cell source, induced pluripotent stem cells (iPSCs) provide a needed option for the application of iPSC-derived neural progenitor cells (NPCs) for regenerative medicine for the treatment of stroke. To enable the application of iPSC technology, it is essential to develop a practical approach to generate iPSC cells under a non-viral, non-integration, feeder-free condition from the most optimal somatic cell type. In this study, we differentiated NPCs from a urine-derived iPSC line (UC-05) which was generated with optimized episomal vectors in a feeder-free culture system. UC-05 can be induced into NPCs efficiently in monolayer cultures using dual SMAD inhibitions, and have the ability to differentiate further into astrocytes and functional neurons in vitro. We then characterized UC-05-derived NPCs upon transplantation into the striatum of adult male rats subjected to transient middle cerebral artery occlusion (tMCAO) reperfusion. While NPCs were grafted into rats 7 days before the MCAO surgery, cells were found to migrate from the grafted side to the lesion side of the brain via corpus callosum 14 days after tMCAO. UC05-derived NPCs were grafted into the striatum 7 days after tMCAO, grafted cells can survive and differentiate into neurons and astrocytes 35 days after transplantation, and synaptic protein SYNAPSIN 1 could also be detected around the grafted human cells. tMCAO rats with NPC engraftment showed better behavior improvement in both postural reflex test and cylinder test compared to control rats engrafted with the cell medium only. Our data indicate that NPCs differentiated from urine-derived iPSCs could act similarly to endogenous neural progenitors in vitro and in vivo. Urine-derived iPSCs could be a potential candidate for cell transplantation therapy in stroke.