The present study was undertaken to determine whether olfactory ensheathing cells (OECs) from the olfactory bulb were capable to promote axonal regeneration and functional recovery when transplanted either acutely or 1 week delayed into the T8 transected rat spinal cord. OEC transplants increased recovery of functional outcomes, as shown electrophysiologically by return of motor evoked potentials and by reduction of hindlimb hyperreflexia, and behaviorally by recovery of movements of hindlimb joints. Axonal regeneration was proven histologically by demonstrating long axonal outgrowth of raphespinal, coerulospinal, and corticospinal tracts within the caudal cord stump. Expression of GFAP and NG2 was down-regulated in perilesional cord segments in transplanted animals, indicating a more suitable environment for axonal regeneration. Overall, earlier recovery and better functional and histological results were observed in rats receiving acute than delayed OEC transplants. The beneficial effects obtained with transplantation after transection are encouraging for the application of OECs in the human injured spinal cord.