Ventral root avulsion (VRA) triggers a strong glial reaction which contributes to neuronal loss, as well as to synaptic detachment. To overcome the degenerative effects of VRA, treatments with neurotrophic factors and stem cells have been proposed. Thus, we investigated neuroprotection elicited by human embryonic stem cells (hESC), modified to overexpress a human fibroblast growth factor 2 (FGF-2), on motoneurons subjected to VRA. Lewis rats were submitted to VRA (L4-L6) and hESC/FGF-2 were applied to the injury site using a fibrin scaffold. The spinal cords were processed to evaluate neuronal survival, synaptic stability, and glial reactivity two weeks post lesion. Then, qRT-PCR was used to assess gene expression of β2-microglobulin (β2m), TNFα, IL1β, IL6 and IL10 in the spinal cord in vivo and FGF2 mRNA levels in hESC in vitro. The results indicate that hESC overexpressing FGF2 significantly rescued avulsed motoneurons, preserving synaptic covering and reducing astroglial reactivity. The cells were also shown to express BDNF and GDNF at the site of injury. Additionally, engraftment of hESC led to a significant reduction in mRNA levels of TNFα at the spinal cord ventral horn, indicating their immunomodulatory properties. Overall, the present data suggest that hESC overexpressing FGF2 are neuroprotective and can shift gene expression towards an anti-inflammatory environment.