Background: Alzheimer’s disease (AD) is characterized by progressive neuronal loss in hippocamp. Epidermal neural crest stem cells (EPI-NCSC) can differentiate into neurons, astrocytes and oligodendrocytes. The purpose of this study was to evaluate the effects of transplanting EPI-NCSC into AD rat model. Methods: Two weeks after induction of AD by injection of Amyloid-β 1-40 into CA1 area of rat hippocamp, Y-maze and single-trial passive avoidance tests were used to show deficit of learning and memory abilities. EPI-NCSC were obtained from the vibrissa hair follicle of rat, cultured and labeled with bromodeoxyuridine. When Alzheimer was proved by behavioral tests, EPI-NCSC was transplanted into CA3 area of hippocamp in AD rat model. The staining of EPI-NCSC markers (nestin and SOX10) was done in vitro. Double-labeling immunofluorescence was performed to study survival and differentiation of the grafted cells. Results: We showed that transplanted EPI-NCSC survive and produce many neurons and a few glial cells, presenting glial fibrillary acidic protein. Total number of granule cells in hippocamp was estimated to be more in the AD rat model with transplanted cells as compared to AD control group. We observed that rats with hippocampal damage made more errors than control rats on the Y-maze, when reward locations were reversed. Conclusion: Transplanted cells were migrated to all areas of hippocamp and the total number of granule cell in treatment group was equal compared to control group. Transplantation of EPI-NCSC into hippocamp might differentiate into cholinergic neurons and could cure impairment of memory in AD rat model.