Traumatic damage to the spinal cord (SCI) frequently leads to irreversible neurological deficits, which may be related to apoptotic neurodegeneration in nerve tissue. The MLC901 treatment possesses neuroprotective and neuroregenerative activity. This study aimed to explore the regenerative potential of MLC901 and the molecular mechanisms promoting neurogenesis and functional recovery after SCI in rats. A calibrated forceps compression injury for 15 s was used to induce SCI in rats, followed by an examination of the impacts of MLC901 on functional recovery. The Basso, Beattie, and Bresnahan (BBB) scores were utilized to assess neuronal functional recovery; H&E and immunohistochemistry (IHC) staining were also used to observe pathological changes in the lesion area. Somatosensory Evoked Potentials (SEPs) were measured using the Nicolet® Viking Quest™ apparatus. Additionally, we employed the Western blot assay to identify PI3K/AKT/GSK-3β pathway-related proteins and to assess the levels of GAP-43 and GFAP through immunohistochemistry staining. The study findings revealed that MLC901 improved hind-limb motor function recovery, alleviating the pathological damage induced by SCI. Moreover, MLC901 significantly enhanced locomotor activity, SEPs waveform, latency, amplitude, and nerve conduction velocity. The treatment also promoted GAP-43 expression and reduced reactive astrocytes (GFAP). MLC901 treatment activated p-AKT reduced p-GSK-3β expression levels and showed a normalized ratio (fold changes) relative to β-tubulin. Specifically, p-AKT exhibited a 4-fold increase, while p-GSK-3β showed a 2-fold decrease in T rats compared to UT rats. In conclusion, these results suggest that the treatment mitigates pathological tissue damage and effectively improves neural functional recovery following SCI, primarily by alleviating apoptosis and promoting neurogenesis. The underlying molecular mechanism of this treatment mainly involves the activation of the PI3K/AKT/GSK-3β pathway.