Embryonic stem (ES) cells are a potential source for treatment of spinal cord injury (SCI). However, one of the main problems facing ES-based cell therapy is tumor formation. In this study, we examined whether co-transplantation of bone marrow stromal cells (BMSCs) with retinoic acid (RA)-treated ES cells prevented tumor formation in SCI mice. Mice transplanted with RA-treated ES cells alone developed tumors in the grafted site and behavioral improvement ceased after 4 weeks. In contrast, no development of tumors was observed in mice co-transplanted with BMSCs, which also showed sustained behavioral improvement. Further, we found attenuated mRNA expression of the undifferentiated markers Oct3/4, UTF1, Nanog, and Sox2 in RA-treated ES cells co-cultured with BMSCs in vitro. These results suggest that co-transplantation of ES cells and BMSCs is useful for preventing development of ES-derived tumors in ES-based cell therapy for SCI.