Multiple sclerosis is an inflammatory disease of the central nervous system (CNS) which includes a neurodegenerative component. Brain derived neurotrophic factor (BDNF) is a neuroprotective agent which might be useful in preventing neurodegeneration but its application has been limited because the blood brain barrier restricts its access to the CNS. We have developed a novel delivery system for BDNF using transformed bone marrow stem cells (BMSC) and undertook studies of EAE to determine whether the delivery of BDNF could reduce inflammation and apoptosis. Mice receiving BDNF producing BMSC had reduced clinical impairment compared to control mice receiving BMSC that did not produce BDNF. Pathological examination of brain and spinal cord showed a reduction in inflammatory infiltrating cells in treated compared to control mice. Apoptosis was reduced in brain and spinal cord based on TUNEL and cleaved Caspase-3 staining. Consistent with the known mechanism of action of BDNF on apoptosis, Bcl-2 and Akt were increased in treated mice. Further studies suggested that these increases could be mediated by inhibition of both caspase dependent and caspase independent pathways. These results suggest that the BDNF delivered by the transformed bone marrow stem cells reduced clinical severity, inflammation and apoptosis in this model.