In this study we compared the function and morphology of two types of neural grafts: allografts of fetal ventral mesencephalic (VM) tissue and xenografts of embryonic stem cell (ESC)-derived dopamine neurons. Mouse embryonic stem cells were cultured and exposed to differentiation factors that induced approximately 10% of the cells to express a dopaminergic phenotype. These cells were then harvested and implanted into the denervated striatum of rats with unilateral lesions of the nigrostriatal pathway. Another group of lesioned rats received allografts of fetal ventral mesencephalic tissue. While both types of grafts yield a similar number of tyrosine hydroxylase (TH)-positive cells, amphetamine-induced rotational behavior was differentially affected by these grafts: rotational behavior was significantly reduced in lesioned rats receiving allografts of fetal VM tissue while ESC grafts had slight but insignificant effects on rotational scores. Densitometry measures of TH+ fiber outgrowth revealed a similar area of reinnervation and a comparable number of TH+ cells for ESC graft when compared with VM grafts. These data suggest there are similarities and also distinct differences in the manner in which ESC and VM grafts interact with the denervated striatum.