Nestin-positive, keratin 15 (K15)-negative multipotent hair follicle stem cells are located above the hair follicle bulge. We have termed this location the hair follicle pluripotent stem cell area. We have previously shown that transplantation of nestin-expressing hair follicle stem cells can regenerate peripheral nerve and spinal cord injuries. In the present study, we regenerated the impinged sciatic nerve by transplanting hair follicle pluripotent stem cells. Human hair follicle stem cells were transplanted around the impinged sciatic nerve of ICR nude (nu/nu) mice. The hair follicle stem cells were transplanted between impinged sciatic nerve fragments of the mouse where they differentiated into glial fibrillary acidic protein-positive Schwann cells and promoted the recovery of pre-existing axons. The regenerated sciatic nerve functionally recovered. These multipotent hair follicle stem cells thereby provide a potential accessible, autologous source of stem cells for regeneration therapy of nerves degenerated by compression between bony or other hard surfaces.