Generation of lineage-specific human embryonic stem cell (hESC) reporter lines will facilitate the real time monitoring of differentiation in live cells and the identification of factors governing these processes. It will also enable researchers to purify specific cell populations from heterogeneous differentiated hESC progeny. Here we report the generation of clonally derived nestin-EGFP reporter hESC lines that express GFP under the control of the neuroepithelial specific nestin 2nd intron enhancer. We show that the nestin-EGFP hESC reporter lines retain the features of undifferentiated hESCs, are able to self-renew in hESC culture conditions and to differentiate into cells of all three germ layers. The nestin-EGFP reporter exhibited high expression in neural progenitor cells upon differentiation, although it is detectable at a low level in the undifferentiated state. Furthermore, the expression of the transgene is exclusively confined to the neural progenitors after differentiation. The specific expression of the transgene is determined by collaborative binding motifs of POU and SOX transcription factors in the nestin enhancer. Deletion of either of the binding elements resulted in a significant reduction of enhancer/promoter activity. Taken together, the nestin-EGFP reporter hESC lines are invaluable not only for the study of the neural differentiation process from hESCs but also for the enrichment of neural progenitor cells from other cell lineages.