In this study, we explored the competence of adipose-derived stem cells to differentiate into Schwann cells in vitro. Rat adipose-derived stem cells were sequentially treated with various factors beta-mercaptoethanol, all-trans-retinoic acid, followed by a mixture of forskolin, basic fibroblast growth factor, platelet-derived growth factor and heregulin. We found that differentiated adipose-derived stem cells displayed the morphology of Schwann cells. Western blotting and dual immunofluorescence staining confirmed that they produced proteins characteristic for Schwann cells, including S100 and glial fibrillary acidic protein. Furthermore, differentiated adipose-derived stem cells could enhance neurite outgrowth in coculture with sensory neurons. These results demonstrate that adipose-derived stem cells can differentiate into Schwann-like cells with morphological, phenotypic, and functional characteristics of Schwann cells.