Transplantation of glial progenitor cells results in transplant‐derived myelination and improved function in rodents with genetic dysmyelination or chemical demyelination. However, glial cell transplantation in adult CNS inflammatory demyelinating models has not been well studied. Here we transplanted human glial‐restricted progenitor (hGRP) cells into the spinal cord of adult rats with inflammatory demyelination, and monitored cell fate in chemically immunosuppressed animals. We found that hGRPs migrate extensively, expand within inflammatory spinal cord lesions, do not form tumors, and adopt a mature glial phenotype, albeit at a low rate. Human GRP‐transplanted rats, but not controls, exhibited preserved electrophysiological conduction across the spinal cord, though no differences in behavioral improvement were noted between the two groups. Although these hGRPs myelinated extensively after implantation into neonatal shiverer mouse brain, only marginal remyelination was observed in the inflammatory spinal cord demyelination model. The low rate of transplant‐derived myelination in adult rat spinal cord may reflect host age, species, transplant environment/location, and/or immune suppression regime differences. We conclude that hGRPs have the capacity to myelinate dysmyelinated neonatal rodent brain and preserve conduction in the inflammatory demyelinated adult rodent spinal cord. The latter benefit is likely dependent on trophic support and suggests further exploration of potential of glial progenitors in animal models of chronic inflammatory demyelination. © 2010 Wiley‐Liss, Inc.