We have recently isolated and expanded skin-derived Schwann cells (Sk-SCs) from human skin and showed that they are largely similar to nerve-derived Schwann cells (N-SCs). Here, we extend our investigation into functional assessments of the nude rats that received human Sk-SCs and N-SCs after intraneural delivery into crushed and decellularized tibial nerve in adult nude rats. Sk-SCs, N-SCs, dermal fibroblasts, or control culture medium was injected into the crushed and decellularized tibial nerve using in situ repeated freeze-thaw cycles. Animals were then subjected to a ladder rung walking test, nociceptive von Frey testing, and walking gait analysis weekly. Animals were euthanized 6 weeks after surgery, gastrocnemius and soleus muscles were weighed, distal nerves were harvested, and whole semithin cross-sections were analyzed using segmentation software. N-SC-injected and dermal fibroblast-injected animals improved significantly at 4 to 6 weeks postinjury in nociceptive assessment compared with medium-injected controls. Sk-SCs recovered more rapidly in tibial functional index at 2 weeks postinjury compared with medium-injected controls. No significant difference was observed for the ladder rung walking test or muscle weight ratio. Histologically, the number of myelinated axons was significantly higher in all cell injection groups compared with medium-injected controls. No significant difference was observed in g ratio, axon diameter, or myelin thickness. Cell injection significantly improved axon regeneration across an in situ decellularized nerve segment. However, a more human cell-permissive animal model is required to delineate functional differences between cell types for preclinical transplantation studies.