Embryonic stem cells can proliferate indefinitely and are capable of differentiating into derivatives of all three embryonic germ layers in vitro, including the neural lineage. The main objective of this study is to test the effects of neural stem cell conditioned medium on the neural differentiation of mouse embryonic stem cells. When cultured in neural stem cell conditioned medium, mouse embryonic stem cells can form floating cell spheres composed of many nestin-positive cells. After trypsinization and growth on gelatin, these embryonic stem cell-derived neural progenitor cells can be expanded for more than 3 months without loss of neural progenitor characteristics. Both neuronal and glial cells can be readily generated from these cells under differentiation conditions. Thus, neural stem cell conditioned medium is a highly potent reagent for inducing the development of mouse embryonic stem cells into the neural lineage, especially neural progenitor cells.