Over the last decade, much progress has been made toward an understanding of the mechanism of regulation of neural differentiation. In this article, following a brief overview of neural induction research, I would like to discuss the potential contribution of basic embryological research to the progress of human therapeutic development in the present and future, focusing on the medical application of in vitro differentiation of neural tissues. This kind of linkage between basic and medical research will probably be strengthened even more by the recent emergence of human induced pluripotent stem cells. Human pluripotent stem cells are powerful tools for bridging the gap from our accumulated knowledge of embryology to regenerative medicine, as well as to a wide spectrum of medical and pharmaceutical research and development. In this commentary, I describe these issues with a particular emphasis on the contributions made by Japanese scientists.