Following spinal cord injury, spared axonal projections undergo spontaneous compensatory sprouting in an attempt to reinnervate synaptic targets that were deinnervated as a result of injury. However, compensatory sprouting is hindered by the expression of a myriad of inhibitory molecules throughout the adult central nervous system, including chondroitin sulfate proteoglycans (CSPGs) and myelin associated inhibitory proteins (MAIPs). In this study, we have identified a diketopiperazine designated DKP101516 that can overcome the inhibitory effects of MAIPs and CSPGs on neurite outgrowth and branching. In vivo analysis demonstrates that DKP101516 enhances the plasticity of various axonal populations following septuple dorsal rhizotomy by overcoming the inhibitory effects of CSPGs and MAIPs. Our results suggest that DKP101516 may encourage spinal cord repair by stimulating compensatory sprouting of intact axonal projections.