The concept of CNS as an immune-privileged site has been challenged by the occurrence of immune surveillance and allogeneic graft rejection in the brain. Here we examined whether the immune response to allogeneic neural grafts is determined by the site of implantation in the CNS. Dramatic regional differences were observed between immune responses to allogeneic neural precursor/stem cell (NPC) grafts in the striatum vs. the hippocampus. Striatal grafts were heavily infiltrated with IBA-1+ microglia/macrophages and CD3+ T cells and completely rejected. In contrast, hippocampal grafts exhibited milder IBA-1+ cell infiltration, were not penetrated efficiently by CD3+ cells, and survived efficiently for at least 2 months. To evaluate whether the hippocampal protective effect is universal, astrocytes were then transplanted. Allogeneic astrocyte grafts elicited a vigorous rejection process from the hippocampus. CD200, a major immune-inhibitory signal, plays an important role in protecting grafts from rejection. Indeed, CD200 knock out NPC grafts were rejected more efficiently than wild type NPCs from the striatum. However, lack of CD200 expression did not elicit NPC graft rejection from the hippocampus. In conclusion, the hippocampus has partial immune-privilege properties that are restricted to NPCs and are CD200-independent. The unique hippocampal milieu may be protective for allogeneic NPC grafts, through host-graft interactions enabling sustained immune-regulatory properties of transplanted NPCs. These findings have implications for providing adequate immunosuppression in clinical translation of cell therapy.