Stem cells have been investigated as treatment for a variety of diagnoses such as Parkinson's disease, Alzheimer's disease and spinal cord injuries. Here, we investigated the possibility of using stem cells as a replacement therapy for lesions of the auditory nerve (AN). We transplanted tau-GFP mouse embryonic stem cells into the AN either by the internal auditory meatus or via the modiolus in rats that had been previously deafened by application of beta-bungarotoxin to the round window niche. We investigated the effect of brain derived neurotrophic factor (BDNF) on cell transplant survival and differentiation. Additionally chondroitinase ABC (ChABC), a digestive enzyme that cleaves the core chondroitin sulfate proteoglycans, was used in order to promote possible migration of cells and axons through the transitional zone. A bioactive isoleucine-lysine-valine-alanine-valine (IKVAV) peptide amphiphile (PA) nanofiber gel was applied around the cell injection site. This nanofiber gel has been shown to promote neural differentiation and other similar gels have been used to encapsulate and release proteins. Three weeks after injection, transplanted cells were found in the scala tympani, the modiolus, the AN trunk and the brain stem. As compared to cell transplantation and gel only, BDNF content in the PA gel increased cell survival and neuronal differentiation. In the animals treated with ChABC we observed extensive migration of cells through the transitional zone to or from the CNS. (c) 2012 Elsevier Inc. All rights reserved.