Restoring function to the injured spinal cord represents one of the most formidable challenges in regenerative medicine. Glial cell transplantation is widely considered to be one of the most promising therapeutic strategies, and several differentiated glial cell types-in particular, Schwann cells and olfactory ensheathing cells (OECs)-have been proposed as transplant candidates. In this Review, we analyze evidence from animal studies for improved functional recovery following transplantation of OECs into spinal cord injuries, and examine the mechanisms by which repair might be achieved. Data obtained using various injury models support the view that OEC transplants can promote functional recovery, but accumulating anatomical evidence indicates that although axons regenerate within a transplant, they do not cross the lesion or reconnect with neurons on the opposite side to any significant extent. Consequently, it is possible that neuroprotection and promotion of sprouting from intact fibers are the main mechanisms that contribute to functional recovery. We conclude that for the foreseeable future the clinical benefits of OEC transplants alone are likely to be modest. The future potential of cell transplantation strategies will probably depend on the success with which the transplants can be combined with other, synergistic, therapies to achieve significant regeneration of axons and re-establish functionally useful connections across a spinal cord injury.