Mouse embryonic stem (ES) cells cultured as aggregates and exposed to retinoic acid are induced to express multiple phenotypes normally associated with neurons. A large percentage of treated aggregates produce a rich neuritic outgrowth. Dissociating the induced aggregates with trypsin and plating the cells as a monolayer results in cultures in which a sizable percentage of the cells have a neuronal appearance. These neuron-like cells express class III beta-tubulin and the neurofilament M subunit. Induced cultures express transcripts for neural-associated genes including the neurofilament L subunit, glutamate receptor subunits, the transcription factor Brn-3, and GFAP. Levels of neurofilament L and GAD67 and GAD65 transcripts rise dramatically upon induction. Physiological studies show that the neuron-like cells generate action potentials and express TTX-sensitive sodium channels, as well as voltage-gated potassium channels and calcium channels. We conclude that a complex system of neuronal gene expression can be activated in cultured ES cells. This system should be favorable for investigating some of the mechanisms that regulate neuronal differentiation.