Mesenchymal stem/stromal cell (MSC) therapy is a promising approach for treatment of as yet incurable detrusor underactivity (DUA), which is characterized by decreased detrusor contraction strength and/or duration, leading to prolonged bladder emptying. In the present study, we demonstrated the therapeutic potential of human embryonic stem cell (ESC)-derived multipotent MSCs (M-MSCs) in a diabetic rat model of DUA. Diabetes mellitus (DM) was induced by intraperitoneal injection of streptozotocin (STZ) (50 mg/kg) into 8-week-old female Sprague-Dawley rats. Three weeks later, various doses of M-MSCs (0.25, 0.5, and 1 × 106 cells) or an equivalent volume of PBS were injected into the outer layer of the bladder. Awake cystometry, organ bath, histological, and gene expression analyses were evaluated 1 week (short-term) or 2 and 4 weeks (long-term) after M-MSC transplantation. STZ-induced diabetic rats developed DUA, including phenotypes with significantly longer micturition intervals, increased residual urine amounts and bladder capacity, decreased micturition pressure on awake cystometry, and contractile responses to various stimuli in organ bath studies. Muscle degeneration, mast cell infiltration, fibrosis, and apoptosis were present in the bladders of DM animals. A single local transplantation of M-MSCs ameliorated DUA bladder pathology, including functional changes and histological evaluation, and caused few adverse outcomes. Immunostaining and gene expression analysis revealed that the transplanted M-MSCs supported myogenic restoration primarily by engrafting into bladder tissue via pericytes, and subsequently exerting paracrine effects to prevent apoptotic cell death in bladder tissue. The therapeutic efficacy of M-MSCs was superior to that of human umbilical cord-derived MSCs at the early time point (1 week). However, the difference in efficacy between M-MSCs and human umbilical cord-derived MSCs was statistically insignificant at the later time points (2 and 4 weeks). Collectively, the present study provides the first evidence for improved therapeutic efficacy of a human ESC derivative in a preclinical model of DM-associated DUA.