Objective To review recent research progress on nerve transfer for the reconstruction of upper limb function following peripheral nerve injury and central nervous system injury. Methods A retrospective analysis of recent domestic and international literature on nerve transfer was conducted. The evolution of nerve transfer surgery from its application in peripheral nerve injuries to its extension to central nervous system injuries was described. The current therapeutic status of nerve transfer in upper limb hemiplegia resulting from spinal cord injury and brain injury was discussed, and the central role of central nervous system plasticity in postoperative functional recovery was analyzed. ResultsNerve transfer is a crucial technique for upper limb function reconstruction, initially used to treat peripheral nerve injuries such as brachial plexus injuries. In recent years, this technique has gradually expanded into the field of central nervous system injuries. In cervical spinal cord injuries, various nerve transfer procedures can restore elbow flexion, wrist extension, and hand grasping functions, with efficacy correlated with the activation of plasticity in the spinal cord distal to the injury site. In cases of upper limb hemiplegia following brain injury, contralateral C7 nerve transfer is the primary procedure, which can significantly reduce muscle tone and improve partial motor function; however, its ability to enhance fine motor skills and key muscle strength remains limited, and challenges such as maladaptive plasticity and co-activatory patterns persist. Mechanisms of central plasticity involve interhemispheric reorganization, activation of cortico-red nucleus-spinal pathways, and the remodeling of sensorimotor networks. Conclusion The expansion of nerve transfer techniques from “peripheral repair” to “induction of central plasticity” offers a new strategy for treating central upper limb paralysis. However, current applications in brain injury are limited by a lack of surgical diversity and restricted central plasticity. Future efforts should integrate cell/gene therapy, electrical stimulation, novel transfer techniques, and systematic rehabilitation training to enhance neural regeneration and central plasticity, thereby further improving therapeutic outcomes.