Traumatic spinal cord injury (SCI) causes neuron death and axonal damage resulting in functional motor and sensory loss, showing limited regeneration because of adverse microenvironment such as neuroinflammation and glial scarring. Currently, there is no effective therapy to treat SCI in clinical practice. Bone marrow-derived mesenchymal stem cells (BMSCs) are candidates for cell therapies but its effect is limited by neuroinflammation and adverse microenvironment in the injured spinal cord. In this study, we developed transgenic BMSCs overexpressing cerebral dopamine neurotrophic factor (CDNF), a secretory neurotrophic factor that showed potent effects on neuron protection, anti-inflammation, and sciatic nerve regeneration in previous studies. Our results showed that the transplantation of CDNF-BMSCs suppressed neuroinflammation and decreased the production of proinflammatory cytokines after SCI, resulting in the promotion of locomotor function and nerve regeneration of the injured spinal cord. This study presents a novel promising strategy for the treatment of spinal cord injury.