Adipose tissue-derived stem cells (ADSCs) have shown potential for the treatment of nerve injuries. Most previous efforts have aimed at stimulating regeneration by using neural-differentiation protocols, but the potential of undifferentiated ADSCs to enhance axonal growth as well as their ability to transdifferentiate in situ have been poorly investigated. In this study, using a rat sciatic nerve model we show that ADSCs, transplanted in an artificial nerve conduit, stimulate axonal outgrowth from the proximal nerve stump and evoke greater Schwann cell (SC) proliferation/intrusion in the distal stump. To track the fate of the transplanted cells, we used green fluorescent protein (GFP)-labelling and polymerase chain reaction (PCR) for the detection of the sex determining region Y (SRY) gene in the donor male cells. Both methods indicated a lack of significant quantities of viable cells 14 days after transplantation. These results suggest that any regenerative effect of transplanted ADSCs is more likely to be mediated by an initial boost of released growth factors and/or by an indirect effect on endogenous SCs activity. Future studies need to address long-term cell survival in tissue-engineered nerve conduits to improve the neuroregenerative potential of ADSCs.