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Bone marrow stromal cell (BMSC) transplantation has shown promise for repair of the spinal cord. We showed earlier that a BMSC transplant limits the loss of spinal nervous tissue after a contusive injury. Here, we addressed the premise that BMSC-mediated tissue sparing underlies functional recovery in adult rats after a contusion of the thoracic spinal cord. Our results reveal that after 2 months BMSCs had elicited a significant increase in spared tissue volumes and in blood vessel density in the contusion epicenter. A strong functional relationship existed between spared tissue volumes and blood vessel density. BMSC-transplanted rats exhibited significant improvements in motor, sensorimotor, and sensory functions, which were strongly correlated with spared tissue volumes. Retrograde tracing revealed that rats with BMSCs had twice as many descending brainstem neurons with an axon projecting beyond the contused spinal cord segment and these correlated strongly with the improved motor/sensorimotor functions but not sensory functions. Together, our data indicate that tissue sparing greatly contributes to BMSC-mediated functional repair after spinal cord contusion. The preservation/formation of blood vessels and sparing/regeneration of descending brainstem axons may be important mediators of the BMSC-mediated anatomical and functional improvements.