Hypoxic–ischemic encephalopathy (HIE) at birth could cause cerebral palsy, mental retardation, and epilepsy, which last throughout the individual’s lifetime. However, few restorative treatments for ischemic tissue are currently available. Cell replacement therapy offers the potential to rescue brain damage caused by HI and to restore motor function. In the present study, we evaluated the ability of embryonic stem cell-derived neural progenitor cells (ES-NPCs) to become cortical deep layer neurons, to restore the neural network, and to repair brain damage in an HIE mouse model. ES cells stably expressing the reporter gene GFP are induced to a neural precursor state by stromal cell co-culture. Forty-hours after the induction of HIE, animals were grafted with ES-NPCs targeting the deep layer of the motor cortex in the ischemic brain. Motor function was evaluated 3 weeks after transplantation. Immunohistochemistry and neuroanatomical tracing with GFP were used to analyze neuronal differentiation and axonal sprouting. ES-NPCs could differentiate to cortical neurons with pyramidal morphology and expressed the deep layer-specific marker, Ctip2. The graft showed good survival and an appropriate innervation pattern via axonal sprouting from engrafted cells in the ischemic brain. The motor functions of the transplanted HIE mice also improved significantly compared to the sham-transplanted group. These findings suggest that cortical region specific engraftment of preconditioned cortical precursor cells could support motor functional recovery in the HIE model. It is not clear whether this is a direct effect of the engrafted cells or due to neurotrophic factors produced by these cells. These results suggest that cortical region-specific NPC engraftment is a promising therapeutic approach for brain repair.