Spinal cord injury (SCI) is a distressing incident with abrupt onset of the motor as well as sensory dysfunction, and most often, the injury occurs as result of high-energy or velocity accidents as well as contact sports and falls in the elderly. The key challenges associated with nerve repair are the lack of self-repair as well as neurotrophic factors and primary and secondary neuronal apoptosis, as well as factors that prevent the regeneration of axons locally. Neurons that survive the initial traumatic damage may be lost due to pathogenic activities like neuroinflammation and apoptosis. Implanted stem cells are capable of differentiating into neural cells that replace injured cells as well as offer local neurotrophic factors that aid neuroprotection, immunomodulation, axonal sprouting, axonal regeneration, and remyelination. At the microenvironment of SCI, stem cells are capable of producing growth factors like brain-derived neurotrophic factor and nerve growth factor which triggers neuronal survival as well as axonal regrowth. Although stem cells have proven to be of therapeutic value in SCI, the major disadvantage of some of the cell types is the risk for tumorigenicity due to the contamination of undifferentiated cells prior to transplantation. Local administration of stem cells via either direct cellular injection into the spinal cord parenchyma or intrathecal administration into the subarachnoid space is currently the best transplantation modality for stem cells during SCI.