Human bone marrow contains two major cell types, hematopoietic stem cells (HSCs) and mesenchymal stem cells (MSCs). MSCs possess self-renewal capacity and pluripotency defined by their ability to differentiate into osteoblasts, chondrocytes, adipocytes and muscle cells. MSCs are also known to differentiate into neurons and glial cells in vitro, and in vivo following transplantation into the brain of animal models of neurological disorders including ischemia and intracerebral hemorrhage (ICH) stroke. In order to obtain sufficient number and homogeneous population of human MSCs, we have clonally isolated permanent and stable human MSC lines by transfecting primary cell cultures of fetal human bone marrow MSCs with a retroviral vector encoding v-myc gene. One of the cell lines, HM3.B10 (B10), was found to differentiate into neural cell types including neural stem cells, neurons, astrocytes and oligodendrocytes in vitro as shown by expression of genetic markers for neural stem cells (nestin and Musashi1), neurons (neurofilament protein, synapsin and MAP2), astrocytes (glial fibrillary acidic protein, GFAP) and oligodendrocytes (myelin basic protein, MBP) as determined by RT-PCR assay. In addition, B10 cells were found to differentiate into neural cell types as shown by immunocytochical demonstration of nestin (for neural stem cells), neurofilament protein and beta-tubulin III (neurons) GFAP (astrocytes), and galactocerebroside (oligodendrocytes). Following brain transplantation in mouse ICH stroke model, B10 human MSCs integrate into host brain, survive, differentiate into neurons and astrocytes and induce behavioral improvement in the ICH animals. B10 human MSC cell line is not only a useful tool for the studies of organogenesis and specifically for the neurogenesis, but also provides a valuable source of cells for cell therapy studies in animal models of stroke and other neurological disorders.