Spinal cord injury (SCI) is a devastating condition with limited capacity for repair. Cell transplantation is a potential strategy to promote SCI repair with cells from the olfactory system being promising candidates. Although transplants of human olfactory mucosa (OM) are already ongoing in clinical trials, the repair potential of this tissue remains unclear. Previously, we identified mesenchymal-like stem cells that reside in the lamina propria (LP-MSCs) of rat and human OM. Little is known about these cells or their interactions with glia such as olfactory ensheathing cells (OECs), which would be co-transplanted with MSCs from the OM, or endogenous CNS glia such as oligodendrocytes. We have characterized, purified, and assessed the repair potential of human LP-MSCs by investigating their effect on glial cell biology with specific emphasis on CNS myelination in vitro. Purified LP-MSCs expressed typical bone marrow MSC (BM-MSC) markers, formed spheres, were clonogenic and differentiated into bone and fat. LP-MSC conditioned medium (CM) promoted oligodendrocyte precursor cell (OPC) and OEC proliferation and induced a highly branched morphology. LP-MSC-CM treatment caused OEC process extension. Both LP and BM-MSCs promoted OPC proliferation and differentiation, but only myelinating cultures treated with CM from LP and not BM-MSCs had a significant increase in myelination. Comparison with fibroblasts and contaminating OM fibroblast like-cells showed the promyelination effect was LP-MSC specific. Thus LP-MSCs harvested from human OM biopsies may be an important candidate for cell transplantation by contributing to the repair of SCI. © 2012 Wiley Periodicals, Inc.