Objective To investigate the effect and mechanism of transplantation of neuregulin1 (NRG1) gene-modified bone marrow mesenchymal stem cells (BMSCs) on the repair of hemi-transected spinal cord injury (SCI) in rats. Methods Isolated and cultured rat BMSCs, followed by transfection with the NRG1 gene. The levels of NRG1 in BMSCs lysate and culture supernatant was deected by ELISA method, and the proliferation activity of the BMSCs was detected by cell counting method. Forty-three healthy 8-week-old SD rats were randomly divided into control group (n=10), SCI model group (n=10), BMSCs group (n=10), and NRG1-BMSCs group (n=13). After establishing the spinal cord hemisection model, animals received in-situ transplantation of BMSCs or NRG1-BMSCs. On the 1, 7, 14, 21, and 28 days after transplantation, the hind limb motor function was evaluated using BBB score and inclined plate test; on the 7th day after transplantation, the migration and distribution of transplanted cells was monitored using a fluorescence microscope; on the 28th day after transplantation, the pathological changes of rat spinal cord tissues was examined using HE staining and Nissl staining; cell apoptosis using TUNEL staining, and levels of endoplasmic reticulum stress-related proteins X-box binding protein 1 (XBP1), C/EBP homologous protein (CHOP), activating transcription factor 4 (ATF4), ATF6, glucose-regulated protein 78 (GRP78)] and apoptosis-related proteins [B-cell lymphoma-2 (Bcl-2) and Bcl-2-associated protein X (Bax)] in rat spinal cord tissues using Western blotting. Results BMSCs were successfully isolated, cultured, and transfected with the NRG1 gene. ELISA method results showed that the NRG1 contents in the NRG1-BMSCs lysate and culture supernatant were significantly higher than that of BMSCs in a time-dependent manner (P<0.05). The proliferation activity of NRG1-BMSCs was significantly higher than that of BMSCs (P<0.05). On the 21 and 28 days after transplantation, the BBB score and the slope angle of the inclined plate in NRG1-BMSCs group were higher than those in SCI model group or BMSCs group (P<0.05). However, it did not reverse to the level in control group (P<0.05). On the 28th day after transplantation, compared with the SCI model group and BMSCs group, neuronal pyknosis reduced, the Nissl body density increased, the expression levels of XBP1, CHOP, ATF4, ATF6, GRP78, and Bax, and the rate of TUNEL-positive cells significantly reduced in NRG1-BMSCs group (P<0.05), and the expression level of Bcl-2 significantly increased (P<0.05). Conclusion Transplantation of NRG1 gene-modified BMSCs can alleviate SCI and improve the recovery of motor function in rats. The mechanism may be related to promoting the proliferation activity of BMSCs, inhibiting cell apoptosis, and mitigating endoplasmic reticulum stress.