The present study was undertaken to examine multifaceted therapeutic effects of vascular endothelial growth factor (VEGF) in a rat spinal cord injury (SCI) model, focusing on its capability to stimulate proliferation of endogenous glial progenitor cells. Neural stem cells (NSCs) can be genetically modified to efficiently transfer therapeutic genes to diseased CNS. We adopted an ex vivo approach using immortalized human NSC line (F3 cells) to achieve stable and robust expression of VEGF in the injured spinal cord. Transplantation of NSCs retrovirally transduced to overexpress VEGF (F3.VEGF cells) at 7 days after contusive SCI markedly elevated the amount of VEGF in the injured spinal cord tissue compared to injection of PBS or F3 cells without VEGF. Concomitantly, phosphorylation of VEGF receptor flk-1 increased in F3.VEGF group. Stereological counting of BrdU+ cells revealed that transplantation of F3.VEGF significantly enhanced cellular proliferation at 2 weeks after SCI. The number of proliferating NG2+ glial progenitor cells (NG2+/BrdU+) was also increased by F3.VEGF. Furthermore, transplantation of F3.VEGF increased the number of early proliferating cells that differentiated into mature oligodendrocytes, but not astrocytes, at 6 weeks after SCI. F3.VEGF treatment also increased the density of blood vessels in the injured spinal cord and enhanced tissue sparing. These anatomical results were accompanied by improved BBB locomotor scores. The multifaceted effects of VEGF on endogenous gliogenesis, angiogenesis, and tissue sparing could be utilized to improve functional outcomes following SCI.