The pets had all suffered spinal injuries which prevented them from using their back legs.
The Cambridge University team is cautiously optimistic the technique could eventually have a role in the treatment of human patients.
The study is the first to test the transplant in "real-life" injuries rather than laboratory animals.
In the study, funded by the Medical Research Council and published in the neurology journal Brain, the dogs had olfactory ensheathing cells from the lining of their nose removed.
These were grown and expanded for several weeks in the laboratory.
Of 34 pet dogs on the proof of concept trial, 23 had the cells transplanted into the injury site - the rest were injected with a neutral fluid.
Many of the dogs that received the transplant showed considerable improvement and were able to walk on a treadmill with the support of a harness.
None of the control group regained use of its back legs.