Tissue engineering is a prerequisite for cell replacement as therapeutic strategy for degenerative diseases, such as Parkinson's disease. In the present study, we investigated regional identity of mesencephalic neural progenitors and characterized their development toward ventral mesencephalic dopaminergic neurons. We show that neural progenitors from ventral and dorsal mouse embryonic day 12 mesencephalon exhibit regional identity in vitro. Treatment of ventral midbrain dissociated neurospheres with transforming growth factor beta (TGF-beta) increased the number of Nurr1- and tyrosine hydroxylase (TH)-immunoreactive cells, which can be further increased when the spheres are treated with TGF-beta in combination with sonic hedgehog (Shh) and fibroblast growth factor 8 (FGF8). TGF-beta differentiation signaling is TGF-beta receptor-mediated, involving the Smad pathway, as well as the p38 mitogen-activated protein kinase pathway. In vivo, TGF-beta2/TGF-beta3 double-knockout mouse embryos revealed significantly reduced numbers of TH labeled cells in ventral mesencephalon but not in locus coeruleus. TH reduction in Tgfbeta2(-/-)/Tgfbeta3(+/-) was higher than in Tgf-beta2(+/-)/Tgf-beta3(-/-). Most importantly, TGF-beta may ectopically induce TH-immunopositive cells in dorsal mesencephalon in vitro, in a Shh- and FGF8-independent manner. Together, the results clearly demonstrate that TGF-beta2 and TGF-beta3 are essential signals for differentiation of midbrain progenitors toward neuronal fate and dopaminergic phenotype.