The promise of stem cell therapy is expected to greatly benefit the treatment of neurodegenerative diseases. An underlying biological reason for the progressive functional losses associated with these diseases is the extremely low natural rate of self-repair in the nervous system. Although the mature CNS harbors a limited number of self-renewing stem cells, these make a significant contribution to only a few areas of brain. Therefore, it is particularly important to understand how to manipulate embryonic stem cells and adult neural stem cells so their descendants can repopulate and functionally repair damaged brain regions. A large knowledge base has been gathered about the normal processes of neural development. The time has come for this information to be applied to the problems of obtaining sufficient, neurally committed stem cells for clinical use. In this article we review the process of neural induction, by which the embryonic ectodermal cells are directed to form the neural plate, and the process of neural�fate stabilization, by which neural plate cells expand in number and consolidate their neural fate. We will present the current knowledge of the transcription factors and signaling molecules that are known to be involved in these processes. We will discuss how these factors may be relevant to manipulating embryonic stem cells to express a neural fate and to produce large numbers of neurally committed, yet undifferentiated, stem cells for transplantation therapies.