Central neurons regenerate axons if a permissive environment is provided; after spinal cord injury, however, inhibitory molecules are present that make the local environment nonpermissive. A promising new strategy for inducing neurons to overcome inhibitory signals is to activate cAMP signaling. Here we show that cAMP levels fall in the rostral spinal cord, sensorimotor cortex and brainstem after spinal cord contusion. Inhibition of cAMP hydrolysis by the phosphodiesterase IV inhibitor rolipram prevents this decrease and when combined with Schwann cell grafts promotes significant supraspinal and proprioceptive axon sparing and myelination. Furthermore, combining rolipram with an injection of db-cAMP near the graft not only prevents the drop in cAMP levels but increases them above those in uninjured controls. This further enhances axonal sparing and myelination, promotes growth of serotonergic fibers into and beyond grafts, and significantly improves locomotion. These findings show that cAMP levels are key for protection, growth and myelination of injured CNS axons in vivo and recovery of function.