The new drug allowed mice with no movement in their lower limbs to walk with 'well-coordinated steps' and even to replicate swimming motions, researchers said.
The experimental drug, called LM11A-31, was developed by Professor Frank Longo, of Stanford University, California.
The researchers gave three different oral doses of LM11A-31, as well as a placebo, to different groups of mice beginning four hours after injury and then twice daily for a 42 day experimental period, the 'Daily Mail' reported.
In tests, the experimental medication did not increase pain in the mice and showed no toxic effects on the animals.
It also efficiently crossed the blood brain barrier, which protects the central nervous system from potentially harmful chemicals carried around in the rest of the bloodstream.
An injury to the spinal cord stops the brain controlling the body and this is the first time an oral drug has been shown to provide an effective therapy.
"This is a first to have a drug that can be taken orally to produce functional improvement with no toxicity in a rodent ," Professor Sung Ok Yoon, of Ohio State University, Columbus, said.
"So far, in the spinal cord injury field with rodent s, effective treatments have included more than one therapy, often involving invasive means. Here, with a single agent, we were able to obtain functional improvement," Yoon said.
The small molecule in the study was tested for its ability to prevent the death of cells called oligodendrocytes.
These cells surround and protect axons, long projections of a nerve cell, by wrapping them in a myelin sheath that protect the fibres.
In addition to functioning as axon insulation, myelin allows for the rapid transmission of signals between nerve cells.
The drug preserved oligodendrocytes by inhibiting the activation of a protein called p75. Yoon's lab previously found p75 is linked to the death of these specialised cells after a spinal cord injury. When they die, axons that are supported by them degenerate.
"Because we know oligodendrocytes continue to die for a long period of time after an injury, we took the approach that if we could put a brake on that cell death, we could prevent continued degeneration of axons," she said.
The study was published in The Journal of Neuroscience.