Severe lesions in the facial nerve may have extensive axonal loss and leave isolated stumps that impose technical difficulties for nerve grafting. Methods: We evaluated bone marrow stem cells (BMSC) in a silicone conduit for rat facial nerve regeneration from isolated stumps. Group A utilized empty silicone tubes; in groups B–D, the tube was filled with acellular gel; and, in groups C and D, undifferentiated BMSC (uBMSC) or Schwann-like cells differentiated from BMSC (dBMSC) were added, respectively. Compound muscle action potentials (CMAPs) were measured, and histology was evaluated. Results: Groups C and D had the highest CMAP amplitudes. Group C had shorter CMAP durations than groups A, B, and D. Distal axonal number and density were increased in group C compared with groups A and B. Conclusions: Regeneration of the facial nerve was improved by both uBMSC and dBMSC in rats, yet uBMSC was associated with superior functional results.