Human umbilical tissue-derived cells (hUTC or palucorcel) are currently under clinical investigation for the treatment of geographic atrophy, a late stage of macular degeneration, but how hUTC transplantation mediates vision recovery is not fully elucidated. Subretinal administration of hUTC preserves visual function in the Royal College of Surgeons (RCS) rat, a genetic model of retinal degeneration caused byMertkloss of function. hUTC secrete synaptogenic and neurotrophic factors that improve the health and connectivity of the neural retina. Therefore, we investigated the progression of synapse and photoreceptor loss and whether hUTC treatment preserves photoreceptors and synaptic connectivity in the RCS rats of both sexes. We found that RCS retinas display significant deficits in synaptic development already by postnatal day 21 (P21), before the onset of photoreceptor degeneration. Subretinal transplantation of hUTC at P21 is necessary to rescue visual function in RCS rats, and the therapeutic effect is enhanced with repeated injections. Synaptic development defects occurred concurrently with morphological changes in Müller glia, the major perisynaptic glia in the retina. hUTC transplantation strongly diminished Müller glia reactivity and specifically protected the α2δ-1-containing retinal synapses, which are responsive to thrombospondin family synaptogenic proteins secreted by Müller glia. Müller glial reactivity and reduced synaptogenesis observed in RCS retinas could be recapitulated by CRISPR/Cas9-mediated loss-of-Mertkin Müller glia in wild-type rats. Together, our results show that hUTC transplantation supports the health of retina at least in part by preserving the functions of Müller glial cells, revealing a previously unknown aspect of hUTC transplantation-based therapy.SIGNIFICANCE STATEMENTDespite the promising effects observed in clinical trials and preclinical studies, how subretinal human umbilical tissue-derived cell (hUTC) transplantation mediates vision improvements is not fully known. Using a rat model of retinal degeneration, the RCS rat (lackingMertk), here we provide evidence that hUTC transplantation protects visual function and health by protecting photoreceptors and preserving retinal synaptic connectivity. Furthermore, we find that loss ofMertkfunction only in Müller glia is sufficient to impair synaptic development and cause activation of Müller glia. hUTC transplantation strongly attenuates the reactivity of Müller glia in RCS rats. These findings highlight novel cellular and molecular mechanisms within the neural retina, which underlie disease mechanisms and pinpoint Müller glia as a novel cellular target for hUTC transplantation.