Functional recovery after transplantation of brain-derived neurotrophic factor (BDNF)-modified neural stem cells (NSCs) was evaluated in a rat model of cerebral ischaemia damage induced by temporary middle cerebral artery occlusion (tMCAO). Western blotting and enzyme-linked immunosorbent assay demonstrated upregulated BDNF protein expression by rat embryonic NSCs transfected with the human BDNF gene (BDNF-NSCs). BDNF-NSCs stimulated neurite outgrowth in cocultured dorsal root ganglion neurons, suggesting that BDNF increased neurogenesis in vitro. In vivo, BDNF promoted recovery of tMCAO. Phosphate-buffered saline, untransformed NSCs or BDNF-NSCs were introduced into the penumbra zone of the right striatum of tMCAO rats and neurological function deficit was assessed for up to 12 weeks using the neurological severity score (NSS). The NSS was significantly lower in the BDNF-NSC transfected transplant group than in all the other groups from week 10. BDNF-NSCs recovered 1 week after transplantation expressed BDNF protein. Transplanted NSCs had differentiated into mature neurons 12 weeks after transplantation. Transgenic NSCs have potential as a therapeutic agent for brain ischaemia.