During embryogenesis, the developmental potential of individual cells is continuously restricted. While embryonic stem (ES) cells derived from the inner cell mass of the blastocyst can give rise to all tissues and cell types, their progeny segregates into a multitude of tissue-specific stem and progenitor cells. Following organogenesis, a pool of resident "adult" stem cells is maintained in many tissues. In this hierarchical concept, transition through defined intermediate stages of decreasing potentiality is regarded as prerequisite for the generation of a somatic cell type. Several recent findings have challenged this view. First, adult stem cells have been shown to adopt properties of pluripotent cells and contribute cells to a variety of tissues. Second, a direct transition from a pluripotent ES cell to a defined somatic phenotype has been postulated for the neural lineage. Finally, nuclear transplantation has revealed that the transcriptional machinery associated with a distinct somatic cell fate can be reprogrammed to totipotency. The possibility to bypass developmental hierarchies in stem cell differentiation opens new avenues for the study of nervous system development, disease, and repair.