Impaired motor and sensory function is common in the upper limb in humans after cerebrovascular stroke and it often remains as a permanent disability. Functional electrical stimulation therapy is known to enhance the motor function of the paretic hand; however, the mechanism of this enhancement is not known. We studied whether neural plasticity has a role in this therapy-induced enhancement of the hand motor function in 20 hemiparetic subjects with chronic stroke (age 53 ± 6 years; 7 females and 13 males; 10 with cerebral infarction and 10 with cerebral haemorrhage; and time since incident 2.4 ± 2.0 years). These subjects were randomized to functional electrical therapy or conventional physiotherapy group. Both groups received upper limb treatment (twice daily sessions) for two weeks. Behavioral hand motor function and neurophysiologic transcranial magnetic stimulation (TMS) tests were applied before and after the treatment and at 6-months follow-up. TMS is useful in assessing excitability changes in the primary motor cortex. Faster corticospinal conduction and newly found muscular responses were observed in the paretic upper limb in the functional electrical therapy group but not in the conventional therapy group after the intervention. Behaviourally, faster movement times were observed in the functional electrical therapy group but not in the conventionally treated group. Despite the small number of heterogeneous subjects, functional exercise augmented with individualized electrical therapy of the paretic upper limb may enhance neuroplasticity, observed as corticospinal facilitation, in chronic stroke subjects, along with moderate improvements in the voluntary motor control of the affected limb.