The present invention relates to treatment methods and methods for sustained delivery of one or more exogenous factors to desired nervous system sites. In certain embodiments, the invention relates to the use of biodegradable microspheres to deliver exogenous factors, such as the morphogenic factor, sonic hedgehog (Shh), to the site of spinal cord injury. In certain embodiments, the Shh-releasing microspheres are administered together with stem cells, which may be spinal cord neural stem cells. In certain embodiments, the invention relates to regrowth of neural cells in both the central and peripheral nervous systems.