Zebrafish have a remarkable capacity to regenerate following spinal cord injury. While many factors controlling neurogenesis have been identified, the cellular mechanisms regulating global neural regeneration are largely unknown. We used in vivo imaging to pin-point specific cells and signals that control CNS regeneration in zebrafish. Surprisingly, we identified two temporally and mechanistically distinct waves of cellular regeneration in the spinal cord. The initial wave of regeneration relying on cell migration of neural precursors to the lesion site, enabling rapid functional recovery, and the activation of quiescent neural stem and progenitor cells (NCSs). This is then followed by the second wave of regeneration which largely driven by regenerative neurogenesis. Neurogenesis compensates for both the loss of tissue at injury site as well as the cells depleted from proximal areas due to early migration. Furthermore, we find that inflammation and leukocytes play a critical role in differentially regulating cell recruitment and activation of NSCs after injury. The two waves of regeneration demonstrate how the zebrafish are able to rapidly regain motor function after complete ablation, but also gradually replenish lost tissue over time. Taken together, our data suggest that inflammation driven recruitment of neural precursors play an unanticipated role in neural repair.