In the present study, we examined the neuroprotective effects and mechanisms of implanted human umbilical cord-derived mesenchymal stem cells (hUC-MSCs) in ischemic stroke. hUC-MSCs were isolated from the endothelial/subendothelial layers of the human umbilical cord and cultured. Twenty days after the induction of in vitro neuronal differentiation, about 77.4% of the inoculated hUC-MSCs displayed morphological features of neurons and expressed neuronal cell markers like TU-20, Trk A, NeuN, and NF-M. However, functionally active neuronal type channels were not detected by electrophysiological examination. Before, during, or one day after in vitro neuronal differentiation, the hUC-MSCs produced granulocyte-colony stimulating factor, vascular endothelial growth factor, glial cell line-derived neurotrophic factor, and brain-derived neurotrophic factor. In an in vivo study, implantation of the hUC-MSCs into the damaged hemisphere of immunosuppressed ischemic stroke rats improved neurobehavioral function and reduced infarct volume relative to control rats. Three weeks after implantation, most of the implanted hUC-MSCs were present in the damaged hemisphere; some of these cells expressed detectable levels of neuron-specific markers. Nestin expression in the hippocampus was increased in the hUC-MSC-implanted group relative to the control group. Since the hUC-MSCs were both morphologically differentiated into neuronal cells and able to produce neurotrophic factors, but had not become functionally active neuronal cells, the improvement in neurobehavioral function and the reduction of infarct volume might be related to the neuroprotective effects of hUC-MSCs rather than the formation of a new network between host neurons and the implanted hUC-MSCs.