The female sex hormone estradiol (E2, 17β-estradiol) has important functions in the developing brain. In addition to regulating sexual differentiation of the brain, E2 participates in the development of brain areas involved in functions unrelated to reproduction, such as cognition. E2 signals mainly thorough two estrogen receptors; estrogen receptor alpha (ERα) and beta (ERβ). While ERα has distinct functions for sexual imprinting of the developing brain, ERβ is considered to participate in the development of brain areas related to cognitive function. In this chapter we will focus on ERβ's role during neural development. We will discuss the contributions of sex chromosomal and sex hormonal effects in this process and place it in relation to recent data on ERβ obtained from stem cell models. Finally, we will discuss the lessons learned from mouse and stem cell models in understanding ERβ's role in neural development and how new stem cell models, by addressing the human relevance, may help to advance our progress in this field.