Matrix metalloproteinases (MMPs) are a large family of proteolytic enzymes involved in inflammation, wound healing and other pathological processes after neurological disorders. MMP-2 promotes functional recovery after spinal cord injury (SCI) by regulating the formation of a glial scar. In the present study, we aimed to investigate the expression and/or activity of several MMPs, after SCI and human umbilical cord blood mesenchymal stem cell (hUCB) treatment in rats with a special emphasis on MMP-2. Treatment with hUCB after SCI altered the expression of several MMPs in rats. MMP-2 is upregulated after hUCB treatment in spinal cord injured rats and in spinal neurons injured either with staurosporine or hydrogen peroxide. Further, hUCB induced upregulation of MMP-2 reduced formation of the glial scar at the site of injury along with reduced immunoreactivity to chondroitin sulfate proteoglycans. Blockade of MMP-2 activity in hUCB cocultured injured spinal neurons reduced the protection offered by hUCB which indicated the involvement of MMP-2 in the neuroprotection offered by hUCB. Based on these results, we conclude that hUCB treatment after SCI upregulates MMP-2 levels and reduces the formation of the glial scar thereby creating an environment suitable for endogenous repair mechanisms.