Transplantation of neural stem cell (NSC)-derived dopamine (DA) neurons is associated with low survival of cells, which could be due to limited striatal innervations and uneven distribution of graft because of its dense neuronal core, limited host–graft interaction, poor axonal outgrowth, lack of continuous neurotrophic factors supply, and an absence of cell adhesion molecules mediated appropriate developmental cues. Olfactory ensheathing cells (OEC) express a variety of growth factors and cell adhesion molecules and promote axonal regrowth and functional recovery in spinal cord injury in animal models and patients. In the present study, we explored the possibility to increase the survival, function, axonal outgrowth and striatal reinnervation of NSC by co-grafting with OEC in 6-OHDA lesioned parkinsonian rats. In the presence of OEC, significantly enhanced survival of NSC-derived DA neurons and axonal fiber outgrowth was evident in the striatum of NSC+OEC co-grafted rats at 24 weeks post-grafting as compared with NSC alone grafted rats. The increased survival of NSC and their striatal reinnervation was further manifested in the form of significant and substantial restitution of motor function and neurochemical recovery in the co-grafted group. Significant enhanced expression of p75NTR (from OEC) and tyrosine hydroxylase (TH) (from NSC) confirmed the co-localization and survival of both types of cells at the transplantation site in co-grafted rats. Co-grafting results co-related well with our in vitro studies, which suggest that OEC not only significantly increase survival, neurite outgrowth and DA release of NSC-derived DA neuron but also protect against 6-OHDA neurotoxicity in co-culture conditions. These results collectively suggest that OEC increase the survival and function of transplanted NSC in 6-OHDA lesioned parkinsonian rats.