Buyang Huanwu Decoction is a classic formula for treating stroke-induced disability in traditional Chinese medicine (TCM). To explore its pharmacological basis, we investigated the effects of the whole formula and its herbal components on the neurological behavior performance and infarction volume in focal cerebral ischaemia rats. The neurological deficit scores and infarction volume were measured at days 3, 7 and 14 after 30 min of occlusion of middle cerebral artery. The results showed that Buyang Huanwu Decoction and its herbal components significantly improved the neurological behavior performances and reduced the infarction volume in the ischaemic brains. To elucidate the potential therapeutic mechanisms, we investigated the proliferation of progenitors by detecting the immunohistochemical staining of thymidine analog 5-bromo-2׳-deoxyuridine (BrdU) and found that the formula stimulated the proliferation of the progenitors at hippocampus and subventricular zone (SVZ) in the ischaemic brains. As vascular endothelial growth factor (VEGF) and its receptor fetal liver kinase (Flk1) are important neurotrophic, neuroprotective and neuroproliferative factors, we studied the expressions of VEGF and Flk1 in the hippocampus, SVZ and cortex in the ischaemic brains and found that the formula led to increase the numbers of VEGF-positive and Flk1-positive cells in the SVZ and cortex in the ischaemic brains. The results indicate that the therapeutic effects of Buyang Huanwu Decoction for recovery of neurological deficits are associated with the stimulation of the proliferation of progenitors and the enhancement of the expressions of VEGF and Flk in ischaemic brains.