Parkinson's disease is the second most common neurodegenerative disease, after Alzheimer's disease, and the most common movement disorder. Drug treatment and deep brain stimulation can ameliorate symptoms, but the progressive degeneration of dopaminergic neurons in the substantia nigra eventually leads to severe motor dysfunction. The transplantation of stem cells has emerged as a promising approach to replace lost neurons in order to restore dopamine levels in the striatum and reactivate functional circuits. We have generated substrate-adherent embryonic stem cell-derived neural aggregates overexpressing the neural cell adhesion molecule L1, because it has shown beneficial functions after central nervous system injury. L1 enhances neurite outgrowth and neuronal migration, differentiation and survival as well as myelination. In a previous study, L1 was shown to enhance functional recovery in a mouse model of Huntington's disease. In another study, a new differentiation protocol for murine embryonic stem cells was established allowing the transplantation of stem cell-derived neural aggregates consisting of differentiated neurons and radial glial cells into the lesioned brain. In the present study, this embryonic stem cell line was engineered to overexpress L1 constitutively at all stages of differentiation and used to generate stem cell-derived neural aggregates. These were monitored in their effects on stem cell survival and differentiation, rescue of endogenous dopaminergic neurons and ability to influence functional recovery after transplantation in an animal model of Parkinson's disease. Female C57BL/6J mice (2 months old) were treated with the mitochondrial toxin 1-methyl-4-phenyl-1,2,3,6-tetrahydropyridine intraperitoneally to deplete dopaminergic neurons selectively, followed by unilateral transplantation of stem cell-derived neural aggregates into the striatum. Mice grafted with L1 overexpressing stem cell-derived neural aggregates showed better functional recovery when compared to mice transplanted with wild-type stem cell-derived neural aggregates and vehicle-injected mice. Morphological analysis revealed increased numbers and migration of surviving transplanted cells, as well as increased numbers of dopaminergic neurons, leading to enhanced levels of dopamine in the striatum ipsilateral to the grafted side in L1 overexpressing stem cell-derived neural aggregates, when compared to wild-type stem cell-derived neural aggregates. The striatal levels of gamma-aminobutyric acid were not affected by L1 overexpressing stem cell-derived neural aggregates. Furthermore, L1 overexpressing, but not wild-type stem cell-derived neural aggregates, enhanced survival of endogenous host dopaminergic neurons after transplantation adjacent to the substantia nigra pars compacta. Thus, L1 overexpressing stem cell-derived neural aggregates enhance survival and migration of transplanted cells, differentiation into dopaminergic neurons, survival of endogenous dopaminergic neurons, and functional recovery after syngeneic transplantation in the 1-methyl-4-phenyl-1,2,3,6-tetrahydropyridine mouse model of Parkinson's disease.