The limited regeneration capacity of the adult central nervous system (CNS) requires strategies to improve recovery of patients. In this context, the interaction of endogenous as well as transplanted stem cells with their environment is crucial. An understanding of the molecular mechanisms could help to improve regeneration by targeted manipulation. In the course of reactive gliosis, astrocytes upregulate Glial fibrillary acidic protein (GFAP) and start, in many cases, to proliferate. Beside GFAP, subpopulations of these astroglial cells coexpress neural progenitor markers like Nestin. Although cells express these markers, the proportion of cells that eventually give rise to neurons is limited in many cases in vivo compared to the situation in vitro. In the first section, we present the characteristics of endogenous progenitor-like cells and discuss the differences in their neurogenic potential in vitro and in vivo. As the environment plays an important role for survival, proliferation, migration, and other processes, the second section of the review describes changes in the extracellular matrix (ECM), a complex network that contains numerous signaling molecules. It appears that signals in the damaged CNS lead to an activation and de-differentiation of astrocytes, but do not effectively promote neuronal differentiation of these cells. Factors that influence stem cells during development are upregulated in the damaged brain as part of an environment resembling a stem cell niche. We give a general description of the ECM composition, with focus on stem cell-associated factors like the glycoprotein Tenascin-C (TN-C). Stem cell transplantation is considered as potential treatment strategy. Interaction of transplanted stem cells with the host environment is critical for the outcome of stem cell-based therapies. Possible mechanisms involving the ECM by which transplanted stem cells might improve recovery are discussed in the last section.