Mesenchymal stem cells have emerged as a potential therapy for a range of neural insults. In animal models of multiple sclerosis, an autoimmune disease that targets oligodendrocytes and myelin, treatment with human MSCs results in functional improvement that reflects both modulation of the immune response and myelin repair. Here we demonstrate that conditioned medium (CM) from human MSCs reduces functional deficits in mouse MOG35–55-induced EAE and promotes the development of oligodendrocytes and neurons. Functional assays identify a critical role for Hepatocyte Growth Factor (HGF) and its primary receptor cMet in MSCs stimulated recovery in EAE, neural cell development and remyelination. Active MSC-CM contains HGF and exogenously supplied HGF promotes recovery in EAE while cMet and anti-HGF antibodies block the functional recovery mediated by HGF and MSC-CM. Systemic treatment with HGF dramatically accelerated remyelination in lysolecithin-induced rat dorsal spinal cord lesions and in slice cultures. Together these data strongly implicate HGF in mediating MSC-stimulated functional recovery in animal models of multiple sclerosis.