Motor neuron loss is characteristic of cervical spinal cord injury (SCI) and contributes to functional deficit. In order to investigate the amenability of the injured adult spinal cord to motor neuron differentiation, we transplanted spinal cord injured animals with a high purity population of human motor neuron progenitors (hMNP) derived from human embryonic stem cells (hESCs). In vitro, hMNPs displayed characteristic motor neuron-specific markers, a typical electrophysiological profile, functionally innervated human or rodent muscle, and secreted physiologically active growth factors that caused neurite branching and neuronal survival. hMNP transplantation into cervical SCI sites in adult rats resulted in suppression of intracellular signaling pathways and changes in inflammatory factors associated with SCI pathogenesis, which correlated with greater endogenous neuronal survival and neurite branching. These neurotrophic effects were accompanied by significantly enhanced performance on all parameters of the balance beam task, as compared to controls. Interestingly, in vivo differentiation of hMNP was dose dependent as the transplantation of higher number of cells resulted in aberrant differentiation into multiple neural subtypes and transplantation of lower numbers into site-specific locations resulted in predominantly neuronal differentiation with mixed phenotype and maturity. These findings underscore the barriers imposed on neuronal differentiation of transplanted cells by the gliogenic nature of the injured spinal cord, and the physiological relevance of transplant-derived neurotrophic support to functional recovery.