Paralysed dogs began to walk again after they were injected with cells grown from the lining of their nose, according to Cambridge University scientists.
The pets had all suffered spinal injuries, which prevented them from using their back legs.
The team hopes that the technique could eventually have a role in the treatment of human patients, the BBC reported.
The study, which has been published in the neurology journal Brain, is also the first to test the transplant in "real-life" injuries rather than laboratory animals.
The only part of the body where nerve fibres continue to grow in adults is the olfactory system.
Found at the back of the nasal cavity, olfactory ensheathing cells (OEC) surround the receptor neurons that both enable us to smell and convey these signals to the brain. The nerve cells need constant replacement, which is promoted by the OECs.
For decades scientists have thought OECs might be useful in spinal cord repair. Initial trials using OECs in humans have suggested the procedure is safe.
In the study, funded by the Medical Research Council, the dogs had olfactory ensheathing cells from the lining of their nose removed. These were grown and expanded for several weeks in the laboratory.
Of 34 pet dogs on the proof of concept trial, 23 had the cells transplanted into the injury site - the rest were injected with a neutral fluid.
Many of the dogs that received the transplant showed considerable improvement and were able to walk on a treadmill with the support of a harness. None of the control group regained use of its back legs.
The research was a collaboration between the MRC's Regenerative Medicine Centre and Cambridge University's Veterinary School.
"Our findings are extremely exciting because they show for the first time that transplanting these types of cell into a severely damaged spinal cord can bring about significant improvement," said Professor Robin Franklin, a regeneration biologist at the Wellcome Trust-MRC Stem Cell Institute and report co-author.
"We're confident that the technique might be able to restore at least a small amount of movement in human patients with spinal cord injuries but that's a long way from saying they might be able to regain all lost function," he stated.
Prof Franklin said the procedure might be used alongside drug treatments to promote nerve fibre regeneration and bioengineering to substitute damaged neural networks.
The researchers say the transplanted cells regenerated nerve fibres across the damaged region of the spinal cord. This enabled the dogs to regain the use of their back legs and coordinate movement with their front limbs.
The new nerve connections did not occur over the long distances required to connect the brain to the spinal cord. The MRC scientists say in humans this would be vital for spinal injury patients who had lost sexual function and bowel and bladder control. (ANI)