Injury to the adult CNS often involves death of motoneurons, resulting in the paralysis and progressive atrophy of muscle. There is no effective therapy to replace motoneurons in the CNS. Our strategy to replace neurons and to rescue denervated muscles is to transplant dissociated embryonic day 14-15 (E14-15) ventral spinal cord cells into the distal stump of a peripheral nerve near the denervated muscles. Here, we test whether long-term delivery of two pharmacological inhibitors to denervated muscle, FK506 or SB203580, enhances reinnervation of muscle from embryonic cells transplanted in the tibial nerve of adult Fischer rats. FK506, SB203580 (2.5 mg/kg) or saline was delivered under the fascia of the medial gastrocnemius muscle for 4 weeks, beginning when muscles were denervated by section of the sciatic nerve. After 1 week of nerve degeneration, one million E14-15 ventral spinal cord cells were transplanted into the distal tibial nerve stump of each rat in the three treatment groups. Ten weeks later, all cell transplants had neuron-specific nuclear protein (NeuN) positive neurons. Neuron survival and axon regeneration were similar across treatments. An average (+/-S.E.) of 210+/-66, 100+/-36 and 176+/-58 myelinated axons grew distally from the cell transplants of rats with muscles treated with FK506, SB203580 or saline, respectively. Regenerating axons in muscles of all three treatments groups were detected with antibodies against phosphorylated neurofilaments and synaptophysin, and motor end plates were labeled with alpha-bungarotoxin. Muscles of rats that received transplants of media only had no axon growth, indicating that the muscles were denervated. The mean muscle fiber areas of rats that received cell transplants and had long-term delivery of FK506, SB203580 or saline to muscles were significantly larger than those of denervated muscle fibers. Thus, cell transplantation reduced muscle atrophy. Transplantation of embryonic cells also resulted in functional muscle reinnervation. Electromyographic activity and force were evoked from >90% of the muscles of rats with cell transplants, but not from denervated muscles. FK506-treated muscles were significantly more fatigue resistant than naive control muscles. FK506-treated muscles also had significantly stronger motor units than those in SB203580 or saline-treated muscles. These data suggest that a pathway regulated by FK506 improves the function of muscles reinnervated by embryonic neurons placed in peripheral nerve.