Multiple Sclerosis (MS) causes neurologic disability due to inflammation, demyelination, and neurodegeneration. Immunosuppressive treatments can modify the disease course but do not effectively promote remyelination or prevent long term neurodegeneration. As a novel approach to mitigate chronic stage pathology, we tested transplantation of mouse induced neural stem cells (iNSCs) into the chronically demyelinated corpus callosum (CC) in adult mice. Male C57BL/6 mice fed 0.3% cuprizone for 12 weeks exhibited CC atrophy with chronic demyelination, astrogliosis, and microglial activation. Syngeneic iNSCs were transplanted into the CC after ending cuprizone and perfused for neuropathology 2 weeks later. Magnetic resonance imaging (MRI) sequences for magnetization transfer ratio (MTR), diffusion-weighted imaging (T2), and diffusion tensor imaging (DTI) quantified CC pathology in live mice before and after iNSC transplantation. Each MRI technique detected progressive CC pathology. Mice that received iNSCs had normalized DTI radial diffusivity, and reduced astrogliosis post-imaging. A motor skill task that engages the CC is Miss-step wheel running, which demonstrated functional deficits from cuprizone demyelination. Transplantation of iNSCs resulted in marked recovery of running velocity. Neuropathology after wheel running showed that iNSC grafts significantly increased host oligodendrocytes and proliferating oligodendrocyte progenitors, while modulating axon damage. Transplanted iNSCs differentiated along astrocyte and oligodendrocyte lineages, without myelinating, and many remained neural stem cells. Our findings demonstrate the applicability of neuroimaging and functional assessments for pre-clinical interventional trials during chronic demyelination and detect improved function from iNSC transplantation. Directly reprogramming fibroblasts into iNSCs facilitates the future translation towards exogenous autologous cell therapies.