Stroke represents one of the leading causes of death and disability in Western countries, but despite intense research, only few options exist for the treatment of stroke-related infarction of brain tissue. In experimental stroke, cell therapy can partly reverse some behavioural deficits. However, the underlying mechanisms have remained unknown as most studies revealed only little, if any, evidence for neuronal replacement and the observed behavioural improvements appeared to be related rather to a graft-derived induction of a positive response in the remaining host tissue than to cell replacement by the graft itself. The present study was performed to test a murine embryonic stem cell (ESC)-based approach in rats subjected to endothelin-induced middle cerebral artery occlusion. Efficacy of cell therapy regarding graft survival, neuronal yield and diversity, and electrophysiological features of the grafted cells were tested after transplanting ESC-derived neural precursors into the infarct core and periphery of adult rats. Here, we show that grafted cells can survive, albeit not entirely, most probably as a consequence of an ongoing immune response, within the infarct core for up to 12 weeks after transplantation and that they differentiate with high yield into immunohistochemically mature glial cells and neurons of diverse neurotransmitter-subtypes. Most importantly, transplanted cells demonstrate characteristics of electrophysiologically functional neurons with voltage-gated sodium currents that enable these cells to fire action potentials. Additionally, during the first 7 weeks after transplantation we observed spontaneous excitatory post-synaptic currents in graft-derived cells indicating synaptic input. Thus, our observations show that ESC-based regenerative approaches may be successful in an acutely necrotic cellular environment.