A surprising shortage of information surrounds the mechanism by which bone marrow stromal cells (BMSC) restore lost neurologic functions when transplanted into the damaged central nervous system. To clarify the issue, the BMSC were cocultured with the neurons using two paradigms: the cell-mixing coculture technique and three-dimensional coculture technique. The green fluorescent protein (GFP)-expressing BMSC were cocultured with the PKH-26-labelled neurons, using cell mixing coculture technique. GFP-positive, PKH-26-negative cells morphologically simulated the neurons and significantly increased the expression of MAP-2, Tuj-1, nestin, and GFAP. GFP/nestin-positive, PKH-26-negative cells increased from 13.6% ± 6.7% to 32.1% ± 15.5% over 7 days of coculture. They further enhanced Tuj-1 expression when cocultured with neurons exposed to 100 μM of glutamate for 10 min. About 20–30% of GFP-positive cells became positive for PKH-26 through coculture with the neurons, but the doubly positive cells did not increase when cocultured with glutamate-exposed neurons. Alternatively, the BMSC significantly ameliorated glutamate-induced neuronal damage when cocultured with the three-dimensional coculture technique. The protective effect was more prominent when coculture was started prior to glutamate exposure than when coculture was started just after glutamate exposure. ELISA analysis revealed that the BMSC physiologically produce NGF, BDNF, SDF-1α, HGF, TGFβ-1, and IGF-1 and significantly enhanced the production of NGF and BDNF when cocultured with glutamate-exposed neurons. These findings strongly suggest that the BMSC may protect and repair the damaged neurons through multiple mechanisms, including transdifferentiation, cell fusion, and production of growth factors. © 2007 Wiley-Liss, Inc.