The unprecedented feat was made possible by computer software replacing the damaged spinal cord as the communication highway between Ian Burkhart's brain and his hand muscles.
"This is the first time a completely paralysed person has regained movement just by using their own thoughts," said researcher Chad Bouton of the Feinstein Institute for Medical Research in Manhasset, New York.
Burkhart, a 24-year-old from Ohio, has a pea-sized chip in his head to read his brain signals, which are then deciphered by a computer and rerouted to the hand, wrist and finger muscles.
The US-based researchers hope their work, still in an early phase, will one day allow paralysed people to feed and dress themselves.
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Their device, called NeuroLife, reroutes messages from the brain to the muscles, bypassing the spinal cord.
Two years ago, they reported a major breakthrough when Burkhart was able to open and close his hand.
Burkhart broke his neck in a holiday diving accident aged 19 and was left quadriplegic -- meaning his arms and legs are paralysed.
"Doctors told me I'd broken my neck and that most likely I'd be able to move my shoulders around, but nothing else for the rest of my life," he told journalists in a teleconference ahead of the report's release.
He volunteered for the trial, Burkhart said, because he wanted to help people like himself regain their independence.
Burkhart underwent surgery to have the chip implanted in the brain's motor cortex area, which controls movement.
The chip was attached on top of the skull to a "connector" linking it to a computer which Burkhart "trained" to read his mind and decode which movements he wanted to execute.