The therapeutic potential of neural stem cell transplantation has been well demonstrated in many models of focal brain damage. However, few studies have sought to determine whether neural stem cells are therapeutic in models of diffuse brain injury, such as observed in Alzheimer's disease and global ischaemia. The present study investigated the effects of transplanted MHP36 neural stem cells on the extent of ischaemic damage in a mouse model of global ischaemia and the effects of the immunosuppressive agent cyclosporin A (CsA). C57Bl/6J mice received an intrastriatal graft of MHP36 neural stem cells 3 days after selective neuronal damage had been induced by global ischaemia. The experimental group was subdivided into CsA or saline controls. We discovered that grafts of MHP36 neural stem cells were able to differentiate into neurons and reduce the extent of ischaemic neuronal damage. This reduction was particularly apparent at 4 week post-transplantation and is independent of CsA immunosuppression. MHP36 cells survived robustly in host ischaemic brain and migrated away from the injection tract towards the caudate nucleus and corpus callosum. Although MHP36 grafts were associated with an acute inflammatory response from reactive astrocytes and microglia at 1 week post-transplantation, this decreased markedly by 4 weeks post-transplantation even in the absence of CsA immunosuppression. This is the first study showing a therapeutic benefit of neural stem cells in a highly diffuse brain injury, further highlighting the possibilities of stem cell transplantation for all types of neurodegenerative disease.