Embryonic stem (ES) cells are a pluripotent and renewable cellular resource with tremendous potential for broad applications in regenerative medicine. Arguably the most important consideration for stem cell-based therapies is the ability to precisely direct the differentiation of stem cells along a preferred cellular lineage. During development, lineage commitment is a multistep process requiring the activation and repression of sets of genes at various stages, from an ES cell identity to a tissue-specific stem cell identity and beyond. Thus, the challenge is to ensure that the pattern of genomic regulation is recapitulated during the in vitro differentiation of ES cells into stem/progenitor cells of the appropriate tissue in a robust, predictable and stable manner. To address this issue, we must understand the ontogeny of tissue-specific stem cells during normal embryogenesis and compare the ontogeny of tissue-specific stem cells in ES cell models. Here, we discuss the issue of directed differentiation of pluripotent ES cells into neural stem cells, which is fundamentally linked to two early events in the development of the mammalian nervous system: the 'decision' of the ectoderm to acquire a neural identity (neural determination) and the origin of neural stem cells within this neural-committed population of cells. A clearer understanding of the molecular and cellular mechanisms that govern mammalian neural cell fate determination will lead to improved ES technology applications in neural regeneration.