Peripheral nerve damage is a significant clinical problem with limited therapeutic options. Adipose-derived mesenchymal stem cells (ADSCs) have emerged as a promising therapeutic approach due to their regenerative potential. However, the underlying mechanisms by which ADSCs promote peripheral nerve regeneration remain unclear. In this study, we investigated the role of syndecan-1 and heat shock protein 70 (HSP-70) in mediating the regenerative effects of ADSCs on peripheral nerves. ADSCs were characterized and isolated from the adipose tissue of rats. In vitro experiments were conducted to evaluate the ability of ADSCs to secrete syndecan-1 and HSP-70 in response to stress conditions. To evaluate the therapeutic potential of ADSCs, rats with sciatic nerve injuries were treated with ADSCs and assessed for functional recovery, nerve regeneration, and changes in syndecan-1 and HSP-70 levels. Regeneration was evaluated with Electromyography (EMG) histology. The results showed that ADSCs could secrete syndecan-1 and HSP-70 in response to stress conditions. Furthermore, ADSC treatment significantly improved functional recovery and nerve regeneration and increased syndecan-1 and HSP-70 levels in the injured nerve. On the other hand, ADSCs make improvements histologically through the influence of Nerve growth factor (NGF), Malondialdehyde (MDA), and EMG.