Previously, we reported that, when clonal neural stem cells (NSCs) were transplanted into brains of postnatal mice subjected to unilateral hypoxic–ischemic (HI) injury (optimally 3–7 days following infarction), donor-derived cells homed preferentially (from even distant locations) to and integrated extensively within the large ischemic areas that spanned the hemisphere. A subpopulation of NSCs and host cells, particularly in the penumbra, “shifted” their differentiation towards neurons and oligodendrocytes, the cell types typically damaged following asphyxia and least likely to regenerate spontaneously and in sufficient quantity in the “post-developmental” CNS. That no neurons and few oligodendrocytes were generated from the NSCs in intact postnatal cortex suggested that novel signals are transiently elaborated following HI to which NSCs might respond. The proportion of “replacement” neurons was ˜5%. Neurotrophin-3 (NT-3) is known to play a role in inducing neuronal differentiation during development and perhaps following injury. We demonstrated that NSCs express functional TrkC receptors. Furthermore, the donor cells continued to express a foreign reporter transgene robustly within the damaged brain. Therefore, it appeared feasible that neuronal differentiation of exogenous NSCs (as well as endogenous progenitors) might be enhanced if donor NSCs were engineered prior to transplantation to (over)express a bioactive gene such as NT-3. A subclone of NSCs transduced with a retrovirus encoding NT-3 (yielding >90% neurons in vitro) was implanted into unilaterally asphyxiated postnatal day 7 mouse brain (emulating one of the common causes of cerebral palsy). The subclone expressed NT-3 efficiently in vivo. The proportion of NSC-derived neurons increased to ˜20% in the infarction cavity and >80% in the penumbra. The neurons variously differentiated further into cholinergic, GABAergic, or glutamatergic subtypes, appropriate to the cortex. Donor-derived glia were rare, and astroglial scarring was blunted. NT-3 likely functioned not only on donor cells in an autocrine/paracrine fashion but also on host cells to enhance neuronal differentiation of both. Taken together, these observations suggest (1) the feasibility of taking a fundamental biological response to injury and augmenting it for repair purposes and (2) the potential use of migratory NSCs in some degenerative conditions for simultaneous combined gene therapy and cell replacement during the same procedure in the same recipient using the same cell (a unique property of cells with stem-like attributes).