Marrow stromal cells (MSCs) can be induced to differentiate into Schwann-like cells under classical induction conditions. However, cells derived from this method are unstable, exhibiting a low neurotrophin expression level after the induction conditions are removed. In Schwann cell (SC) culture, progesterone (PROG) enhances neurotrophic synthesis and myelination, specifically regulating the expression of the myelin protein zero (P0)- and peripheral myelin protein 22 (PMP22)-encoding genes by acting in concert or in synergy with insulin and glucocorticoids (GLUCs). In the present study, we investigated whether combined PROG, GLUC, and insulin therapy induced MSCs to differentiate into modified SC-like cells with phenotypes similar to those of mature SCs. After being cultured for 2 weeks in modified differentiation medium, the modified SC-like cells showed increased expression of P0 and PMP22. In addition, morphological and phenotypic characterizations were conducted over a period of over 2 weeks, and functional characteristics persisted for more than 3 weeks after the induction reagents were withdrawn. The transplantation of green fluorescent protein-labeled, modified SC-like cells into transected sciatic nerves with a 10-mm gap significantly increased the proliferation of the original SCs and improved axon regeneration and myelination compared with original BM-SCs. Immunostaining for P0 revealed that more of the transplanted modified SC-like cells retained the phenotypic characteristics of SCs. Taken together, these results reveal that the combined application of PROG, GLUC, and insulin induces MSCs to differentiate into cells with phenotypic, molecular, and functional properties of mature SCs.