Functional recovery after peripheral nerve repair in humans is often disappointing. A major reason for this is the inaccuracy of re-innervation of muscles and sensory structures. We hypothesized that promoting plasticity in the spinal cord, through digestion of chondroitin sulphate proteoglycans (CSPGs) with chondroitinase ABC (ChABC), might allow the CNS to compensate for inaccurate peripheral re-innervation and improve functional recovery. The median and ulnar nerves were injured and repaired to produce three grades of inaccuracy of peripheral re-innervation by (i) crush of both nerves; (ii) correct repair of median to median and ulnar to ulnar; and (iii) crossover of the median and ulnar nerves. Mapping of the motor neuron pool of the flexor carpi radialis muscle showed precise re-innervation after nerve crush, inaccurate regeneration after correct repair, more inaccurate after crossover repair. Recovery of forelimb function, assessed by skilled paw reaching, grip strength and sensory testing varied with accuracy of re-innervation. This was not due to differences in the number of regenerated axons. Single injections of ChABC into the spinal cord led to long-term changes in the extracellular matrix, with hyaluronan and neurocan being removed and not fully replaced after 8 weeks. ChABC treatment produce increased sprouting visualized by MAP1BP staining and improved functional recovery in skilled paw reaching after correct repair and in grip strength after crossover repair. There was no hyperalgesia. Enhanced plasticity in the spinal cord, therefore, allows the CNS to compensate for inaccurate motor and sensory re-innervation of the periphery, and may be a useful adjunct therapy to peripheral nerve repair.