AIM: To access the differentiation of rat mesenchymal stem cell (MSC) in the microenvironment of retinal degeneration induced by the administration of sodium iodate. METHODS: In-vitro cultured Lewis rat MSC were injected into the sub-retinal space of NaIO3 induced retinal degeneration rat eyes (30g/L NaIO3 100mg/kg). To observe the trace and differentiation of MSC by immuno-fluorescent method successively in 5 weeks after the surgery. RESULTS: The majority of the transplanted cells stay in retinal pigment epithelium layer and cones & rods layer. From the 2nd week after transplantation, the engrafted MSC express PCK and rhodopsin under fluorescent microscope. CONCLUSION: MSC can survive mainly in the outer layer of retina in the microenvironment of retinal degeneration and differentiate forward the RPE cell and photoreceptor.