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Abstract Machado-Joseph disease (MJD) is a neurodegenerative disorder characterized by widespread neuronal death affecting the cerebellum. Cell therapy can trigger neuronal replacement and neuroprotection through bystander effects providing a therapeutic option for neurodegenerative diseases. Here, human control (CNT) and MJD iPSC-derived neuroepithelial stem cells (NESC) were established and tested for their therapeutic potential. Cells’ neuroectodermal phenotype was demonstrated. Brain organoids obtained from the Control NESC showed higher mRNA levels of genes related to stem cells' bystander effects, such as BDNF, NEUROD1, and NOTCH1, as compared with organoids produced from MJD NESC, suggesting that Control NESC have a higher therapeutic potential. Graft-derived glia and neurons, such as cells positive for markers of cerebellar neurons, were detected six months after NESC transplantation in mice cerebella. The graft-derived neurons established excitatory and inhibitory synapses in the host cerebella, although CNT neurons exhibited higher excitatory synapse numbers compared with MJD neurons. Cell grafts, mainly CNT NESC, sustained the bystander effects through modulation of inflammatory interleukins (IL1B and IL10), neurotrophic factors (NGF), and neurogenesis-related proteins (Msi1 and NeuroD1), for six months in the mice cerebella. Altogether this study demonstrates the long-lasting therapeutic potential of human iPSC-derived NESC in the cerebellum.