Objectives To study the physiologic outcome of allogenic transplant of muscle-derived progenitor cells (MDPCs) in the denervated female rat urethra. Methods MDPCs were isolated from muscle biopsies of normal 6-week-old Sprague-Dawley rats and purified using the preplate technique. Sciatic nerve-transected rats were used as a model of stress urinary incontinence. The experimental group was divided into three subgroups: control, denervated plus 20 μL saline injection, and denervated plus allogenic MDPCs (1 to 1.5 × 10 6 cells) injection. Two weeks after injection, urethral muscle strips were prepared and underwent electrical field stimulation. The pharmacologic effects of d-tubocurare, phentolamine, and tetrodotoxin on the urethral strips were assessed by contractions induced by electrical field stimulation. The urethral tissues also underwent immunohistochemical staining for fast myosin heavy chain and CD4-activated lymphocytes. Results Urethral denervation resulted in a significant decrease of the maximal fast-twitch muscle contraction amplitude to only 8.77% of the normal urethra and partial impairment of smooth muscle contractility. Injection of MDPCs into the denervated sphincter significantly improved the fast-twitch muscle contraction amplitude to 87.02% of normal animals. Immunohistochemistry revealed a large amount of new skeletal muscle fiber formation at the injection site of the urethra with minimal inflammation. CD4 staining showed minimal lymphocyte infiltration around the MDPC injection sites. Conclusions Urethral denervation resulted in near-total abolishment of the skeletal muscle and partial impairment of smooth muscle contractility. Allogenic MDPCs survived 2 weeks in sciatic nerve-transected urethra with minimal inflammation. This is the first report of the restoration of deficient urethral sphincter function through muscle-derived progenitor cell tissue engineering. MDPC-mediated cellular urethral myoplasty warrants additional investigation as a new method to treat stress urinary incontinence.