Bone marrow mesenchymal stem cells (MSCs) can differentiate into several types of mesenchymal cells, including osteocytes, chondrocytes, and adipocytes, but, under appropriate experimental conditions, can also differentiate into nonmesenchymal cells--for instance, neural cells. These observations have raised interest in the possible use of MSCs in cell therapy strategies for various neurological disorders. In the study reported here, we addressed the question of in vitro differentiation of MSCs into functional neurons. First, we demonstrate that when they are co-cultured with cerebellar granule neurons, adult MSCs can express neuronal markers. Two factors are needed for the emergence of neuronal differentiation of the MSCs: the first one is nestin expression by MSCs (nestin is a marker for the responsive character of MSCs to extrinsic signals), and the second one is a direct cell-cell interaction between neural cells and MSCs that allows the integration of these extrinsic signals. Three different approaches suggest that neural phenotypes arise from MSCs by a differentiation rather than a cell fusion process, although this last phenomenon can also coexist. The expression of several genes--including sox, pax, notch, delta, frizzled, and erbB--was analyzed by quantitative reverse transcription polymerase chain reaction (RT-PCR) in order to further characterize the nestin-positive phenotype compared to the nestin-negative one. An overexpression of sox2, sox10, pax6, fzd, erbB2, and erbB4 is found in nestin-positive MSCs. Finally, electrophysiological analyses demonstrate that MSC-derived neuron-like cells can fire single-action potentials and respond to several neurotransmitters such as GABA, glycine, and glutamate. We conclude that nestin-positive MSCs can differentiate in vitro into excitable neuron-like cells.