TNFα is persistently elevated in many injury and disease conditions. Previous reports of cytotoxicity of TNFα for oligodendrocytes and their progenitors suggest that the poor endogenous remyelination in patients with traumatic injury or multiple sclerosis may be due in part to persistent inflammation. Understanding the effects of inflammatory cytokines on potential cell therapy candidates is therefore important for evaluating the feasibility of their use. In this study, we assessed the effects of long term exposure to TNFα on viability, proliferation, migration and TNFα receptor expression of cultured rat olfactory ensheathing cells (OECs) and Schwann cells (SCs). Although OECs and SCs transplanted into the CNS produce similar myelinating phenotypes, and might be expected to have similar therapeutic uses, we report that they have very different sensitivities to TNFα. OECs exhibited positive proliferative responses to TNFα over a much broader range of concentrations than SCs. Low TNFα concentrations increased proliferation and migration of both OECs and SCs, but SC number declined in the presence of 100 ng/ml or higher concentrations of TNFα. In contrast, OECs exhibited enhanced proliferation even at high TNFα concentrations (up to 1 µg/ml) and showed no evidence of TNF cytotoxicity even at 4 weeks post-treatment. Furthermore, while both OECs and SCs expressed TNFαR1 and TNFαR2, TNFα receptor levels were downregulated in OECs after exposure to100 ng/ml TNFα for 5–7 days, but were either elevated or unchanged in SCs. These results imply that OECs may be a more suitable cell therapy candidate if transplanted into areas with persistent inflammation.