Mesenchymal stem cells (MSCs) have emerged as a potential therapy for a range of neural insults. In animal models of multiple sclerosis, an autoimmune disease that targets oligodendrocytes and myelin, treatment with human MSCs results in functional improvement that reflects both modulation of the immune response and myelin repair. Here we demonstrate that conditioned medium from human MSCs (MSC-CM) reduces functional deficits in mouse MOG3555-induced experimental autoimmune encephalomyelitis (EAE) and promotes the development of oligodendrocytes and neurons. Functional assays identified hepatocyte growth factor (HGF) and its primary receptor cMet as critical in MSC-stimulated recovery in EAE, neural cell development and remyelination. Active MSC-CM contained HGF, and exogenously supplied HGF promoted recovery in EAE, whereas cMet and antibodies to HGF blocked the functional recovery mediated by HGF and MSC-CM. Systemic treatment with HGF markedly accelerated remyelination in lysolecithin-induced rat dorsal spinal cord lesions and in slice cultures. Together these data strongly implicate HGF in mediating MSC-stimulated functional recovery in animal models of multiple sclerosis.