Axons fail to regenerate after spinal cord injury (SCI) in adult mammals, leading to permanent loss of function. After SCI, ensheathing cells (ECs) promote recovery in animal models, whereas methylprednisolone (MP) promotes neurological recovery in humans. In this study, the effectiveness of combining ECs and MP after SCI was investigated for the first time. After lesioning the corticospinal tract in adult rats, ECs were transplanted into the lesion, and MP was administered for 24 hr. At 6 weeks after injury, functional recovery was assessed by measuring successful performance of directed forepaw reaching (DFR), expressed as percentages. Axonal regeneration was analyzed by counting the number of corticospinal axons, anterogradely labeled with biotin dextran tetramethylrhodamine, caudal to the lesion. Lesioned control rats, receiving either no treatment or vehicle, had abortive axonal regrowth (1 mm) and poor DFR success (38 and 42%, respectively). Compared with controls, MP-treated rats had significantly more axons 7 mm caudal to the lesion, and DFR performance was significantly improved (57%). Rats that received ECs in combination with MP had significantly more axons than all other lesioned rats up to 13 mm. Successful DFR performance was significantly higher in rats with EC transplants, both without (72%) and with (78%) MP, compared with other lesioned rats. These data confirm previous reports that ECs promote axonal regeneration and functional recovery after spinal cord lesions. In addition, this research provides evidence that, when used in combination, MP and ECs improve axonal regrowth up to 13 mm caudal to the lesion at 6 weeks after injury.