Objective: We investigated whether neural stem cells (NSC) with transgenic expression of human nerve growth factor (hNGF) transplanted into the brain could offer a therapeutic option for the treatment of Alzheimer’s disease (AD). Methods: We infused okadaic acid into rat lateral ventricles to establish a chronic AD animal model. In addition, NSC were stably transduced with hNGF and enhanced green fluorescent protein (eGFP) genes (NSC-hNGF-eGFP) by using a recombination adeno-associated virus serotype 2 (rAAV2) vector. These genetically modified stem cells were grafted into the cerebral cortex of AD rats. Results: AD model rats showed significant damage in learning and memory function, with the formation of senile plaques and neurofibrillary tangles in the cerebral cortex. The transferred hNGF gene conferred stable and high levels of protein expression in NSC in vitro. Moreover, the NSC-hNGF-eGFP, but not the NSC, survived, integrating into the host brain and enhancing cognitive performance after transplantation. Conclusion: The injection of okadaic acid into rat lateral ventricles constitutes a promising animal model for investigating selective aspects of AD. rAAV2-mediated hNGF delivery can render long-term and stable transduction of hNGF in NSC. NSC-hNGF-eGFP transplantation may offer a viable therapeutic approach for treatment of AD.