Introduction: Hand and leg transplantation (Tx) in military/civilian populations is increasingly needed to improve the quality of life of individuals. Optimizing nerve regeneration and preventing immune rejection are vital to successful outcomes in limb Tx. As a first step, our objective was to investigate whether bone marrow derived mesenchymal stem cells (MSCs) can improve nerve regeneration and function. Methods: We performed orthotopic syngeneic hind-limb transplants in Lewis (RT1. Al) rats. Osteosynthesis of femur was performed using intramedullary pin and bone cement. The donor and recipient vessels were anastomosed using the vascular cuff technique. The sciatic nerve ends were approximated using 10-O nylon sutures. Rats received syngeneic MSC (5x106; passage ≤8; n=8) or vehicle (n=7) locally (nerve, bone and vascular anastomoses sites) and intravenously. Following Tx ( ≥2 weeks) laser doppler and radiologic analysis were performed to assess limb vascularization and fusion of native and graft femoral ends. Sensory function of the transplanted limb was assessed by cutaneous pain reaction test and motor function by walking track analysis every 1-2 weeks until 26 weeks post-Tx. Results:Ex vivo expanded Rat MSCs were CD29+, CD31-, CD34-, CD44+, CD45low, CD90+, MHC Class I+, Class II- and were pluripotent: differentiated in to adipocytes, osteocytes and chondrocytes in ex vivo cultures. Limb Tx was highly successful (100% survival). Four weeks post-Tx sensory nerve function was <0.3 on a scale of Grade 0 to 3 (0=No function; 3=Normal function). By 8 weeks in vehicle group it was 2.2±0.7 (tibial), 1.2±0.5 (peroneal) and 1.7±0.9 (sural), and in MSC group it was 2.6±0.4 (tibial), 1.0±0.9 (peroneal) and 1.7±0.9 (sural). Overall sensory function was higher but not significant in MSC group compared to vehicle group at 4, 8, 16 and 24 weeks post-Tx. Walking track analysis (for motor nerve function) did not produce clear foot prints to calculate Sciatic Function Index (SFI), so a novel grading system for available foot prints was developed. Radiology and laser doppler analysis revealed normal bone fusion and vascularization, respectively. Gastrocnemius muscle was atrophied (P<0.05) and animals developed flexion-contractures in the transplanted limb. Conclusion: The limb transplantation procedure was highly successful, sensory function was recovered (>70%) and MSC therapy appears to promote transplanted limb nerve functional recovery.