Background: Bone marrow-derived mesenchymal stem cells (MSCs) have emerged as beneficial cellular vehicles for nervous system rescue and repair. A better understanding how MSCs are involved in mediating neural repair will facilitate development of novel therapeutic strategies. Methods: In the present study bone marrow-derived MSCs were isolated and characterized from Brown Norway rats. The capacity of the MSCs to influence the differentiation of adult hippocampal progenitor cells (AHPCs) was investigated using contact and non-contact co-culture configurations. Results: These MSCs showed a stable and consistent growth rate, retained short population doubling time (PDT) and showed high capacity of cell proliferation. Co-culturing of AHPCs with MSCs did not appear to significantly affect the proliferation of the AHPCs or impact the proportion of neuronal or glial differentiation of the AHPCs. However, both contact co-culture (CCC) and non-contact co-culture (NCCC) significantly promoted neurite outgrowth from neuronal AHPCs. Conclusions: The ability of MSCs to promote the morphological differentiation of AHPCs may serve as an added benefit when developing cell-based strategies for nervous system rescue and repair.