Mesenchymal stem cells resident in adult bone marrow are best characterized by their capacity to differentiate into connective tissue cell types such as adipocytes, chondrocytes, osteoblasts and hematopoiesis-supporting stroma. Accordingly, these cells are being evaluated in human clinical trials for efficacy in treating genetic diseases of bone, to speed hematopoietic recovery after bone marrow transplantation and reduce the severity of graft versus host disease. In the past few years MSCs have also been reported to exhibit a broad degree of plasticity commensurate with other adult stem cell populations, including the ability to differentiate in vitro and in vivo into non-mesodermal cell types such as neurons and astrocytes. MSCs have also been reported to promote repair and regeneration of nervous tissue within the central and peripheral nervous system, although the mechanism by which this occurs remains indeterminate. Herein, we review evidence purporting the differentiation of MSCs into neural cell lineages and evaluate the utility of MSCs as cellular vectors for treating neurological disorders and spinal cord injury. Based on our analysis of their transcriptome, we also theorize how the varied functions of MSCs and their progeny in bone marrow may extrapolate to a therapeutic benefit in models of neurological disease.