Human induced pluripotent stem cells (hiPSCs) are a most appealing source for cell replacement therapy in acute brain lesions. We evaluated the potential of hiPSC therapy in stroke by transplanting hiPSC-derived neural progenitor cells (NPCs) into the postischemic striatum. Grafts received host tyrosine hydroxylase-positive afferents and contained developing interneurons and homotopic GABAergic medium spiny neurons that, with time, sent axons to the host substantia nigra. Grafting reversed stroke-induced somatosensory and motor deficits. Grafting also protected the host substantia nigra from the atrophy that follows disruption of reciprocal striatonigral connections. Graft innervation by tyrosine hydoxylase fibers, substantia nigra protection, and somatosensory functional recovery were early events, temporally dissociated from the slow maturation of GABAergic neurons in the grafts and innervation of substantia nigra. This suggests that grafted hiPSC-NPCs initially exert trophic effects on host brain structures, which precede integration and potential pathway reconstruction. We believe that transplantation of NPCs derived from hiPSCs can provide useful interventions to limit the functional consequences of stroke through both neuroprotective effects and reconstruction of impaired pathways.