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We identified a suitable biomatrix that improved axon regeneration and functional outcome after partial (moderate) and complete (severe) chronic spinal cord injury (SCI) in rat. Five weeks after dorsal thoracic hemisection injury the lesion scar was resected via aspiration and the resulting cavity was filled with different biopolymers such as Matrigel™, alginate-hydrogel and polyethylene glycol 600 (PEG) all of which have not previously been used as sole graft-materials in chronic SCI. Immunohistological staining revealed marked differences between these compounds regarding axon regeneration, invasion/elongation of astrocytes, fibroblasts, endothelial and Schwann cells, revascularization, and collagen deposition. According to axon regeneration-supporting effects, the biopolymers could be ranked in the order PEG > > alginate-hydrogel > Matrigel™. Even after complete chronic transection, the PEG-bridge allowed long-distance axon regeneration through the grafted area and for, at least, 1 cm beyond the lesion/graft border. As revealed by electron microscopy, bundles of regenerating axons within the matrix area received myelin ensheathment from Schwann cells. The beneficial effects of PEG-implantation into the resection-cavity were accompanied by long-lasting significant locomotor improvement over a period of 8 months. Following complete spinal re-transection at the rostral border of the PEG-graft the locomotor recovery was aborted, suggesting a functional role of regenerated axons in the initial locomotor improvement. In conclusion, scar resection and subsequent implantation of PEG into the generated cavity leads to tissue recovery, axon regeneration, myelination and functional improvement that have not been achieved before in severe chronic SCI.