Schwann cells naturally support axonal regeneration after injury in the peripheral nervous system, and have also shown a significant, albeit limited, ability to support axonal growth and remyelination after grafting to the central nervous system (CNS). It is possible that Schwann cell-induced axonal growth in the CNS could be substantially increased by genetic manipulation to secrete augmented amounts of neurotrophic factors. To test this hypothesis, cultured primary adult rat Schwann cells were genetically modified using retroviral vectors to produce and secrete high levels of human nerve growth factor (NGF). These cells were then grafted to the midthoracic spinal cords of adult rats. Findings were compared to animals that received grafts of nontransduced Schwann cells. Spinal cord lesions were not placed prior to grafting because the primary aim of this study was to examine features of grafted Schwann cell survival, growth, and effects on host axons. In vitro prior to grafting, Schwann cells secreted 1.5+/-0.1 ng human NGF/ml/10(6) cells/day. Schwann cell transplants readily survived for 2 wk to 1 yr after in vivo placement. Some NGF-transduced grafts slowly increased in size over time compared to nontransduced grafts; the latter remained stable in size. NGF-transduced transplants were densely penetrated by primary sensory nociceptive axons originating from the dorsolateral fasciculus of the spinal cord, whereas control grafts showed significantly fewer penetrating sensory axons. Over time, Schwann cell grafts also became penetrated by TH- and DBH-labeled axons of putative coerulospinal origin, unlike control cell grafts. Ultrastructurally, axons in both graft types were extensively myelinated by Schwann cells. Grafted animals showed no changes in gross locomotor function. In vivo expression of the human NGF transgene was demonstrated for periods of at least 6 m. These findings demonstrate that primary adult Schwann cells 1) can be transduced to secrete augmented levels of neurotrophic factors, 2) survive grafting to the CNS for prolonged time periods, 3) elicit robust growth of host neurotrophin-responsive axons, 4) myelinate CNS axons, and 5) express the transgene for prolonged time periods in vivo. Some grafts slowly enlarge over time, a feature that may be attributable to the propensity of Schwann cells to immortalize after multiple passages. Transduced Schwann cells merit further study as tools for promoting CNS regeneration.