Interest in promoting regeneration of the injured nervous system has recently turned toward the use of endogenous stem cells. Elucidating cues involved in driving these precursor cells out of quiescence following injury, and the signals that drive them toward neuronal and glial lineages, will help to harness these cells for repair. Using a biomechanically validated in vitro organotypic stretch injury model, cortico-hippocampal slices from postnatal mice were cultured and a stretch injury equivalent to a severe traumatic brain injury (TBI) applied. In uninjured cortex, proliferative potential under in vitro conditions is virtually absent in older slices (equivalent postnatal day 15 compared to 8). However, following a severe stretch injury, this potential is restored in injured outer cortex. Using slices from mice expressing a fluorescent reporter on the human glial fibrillary acidic protein (GFAP) promoter, we show that GFAP+ cells account for the majority of proliferating neurospheres formed, and that these cells are likely to arise from the cortical parenchyma and not from the subventricular zone. Moreover, we provide evidence for a correlation between upregulation of sonic hedgehog signaling, a pathway known to regulate stem cell proliferation, and this restoration of regenerative potential following TBI. Our results indicate that a source of quiescent endogenous stem cells residing in the cortex and subcortical tissue proliferate in vitro following TBI. Moreover, these proliferating cells are multipotent and are derived mostly from GFAP-expressing cells. This raises the possibility of using this endogenous source of stem cells for repair following TBI.