Posttraumatic syringomyelia (PTS) is a serious condition of progressive expansion of spinal cord cysts, affecting patients with spinal cord injury years after injury. To evaluate neural cell therapy to prevent cyst expansion and potentially replace lost neurons, we developed a rat model of PTS. We combined contusive trauma with subarachnoid injections of blood, causing tethering of the spinal cord to the surrounding vertebrae, resulting in chronically expanding cysts. The cysts were usually located rostral to the injury, extracanalicular, lined by astrocytes. T2*-weighted magnetic resonance imaging (MRI) showed hyperintense fluid-filled cysts but also hypointense signals from debris and iron-laden macrophages/microglia. Two types of human neural stem/progenitor cells—fetal neural precursor cells (hNPCs) and neuroepithelial-like stem cells (hNESCs) derived from induced pluripotent stem cells—were transplanted to PTS cysts. Cells transplanted into cysts 10 weeks after injury survived at least 10 weeks, migrated into the surrounding parenchyma, but did not differentiate during this period. The cysts were partially obliterated by the cells, and cyst walls often merged with thin layers of cells in between. Cyst volume measurements with MRI showed that the volumes continued to expand in sham-transplanted rats by 102%, while the cyst expansion was effectively prevented by hNPCs and hNESCs transplantation, reducing the cyst volumes by 18.8% and 46.8%, respectively. The volume reductions far exceeded the volume of the added human cells. Thus, in an animal model closely mimicking the clinical situation, we provide proof-of-principle that transplantation of human neural stem/progenitor cells can be used as treatment for PTS.