The role of cultured bone marrow stromal cells (BMSCs) in peripheral nerve regeneration was examined using an established rabbit peroneal nerve regeneration model. A 15-mm peroneal nerve defect was bridged with a vein filled with BMSCs $(1{ imes}10^6)$, which had been embedded in collagen gel. On the contralateral side, the defect was bridged with a vein filled with collagen gel alone. When the regenerated tissue was examined 4, 8 and 12 weeks after grafting, the number and diameter of the myelinated fibers in the side with the BMSCs were significantly higher than in the control side without the BMSCs. This demonstrates the potential of using cultured BMSCs in peripheral nerve regeneration.