We report here that neural transplantation of in vitro-differentiated embryonic stem (ES) cells provides a versatile strategy for gene transfer into the central nervous system. ES cells were subjected to an optimized in vitro differentiation protocol to obtain embryoid bodies. These aggregates were stereotaxically transplanted into the brain of recipient adult mice, where they followed a strictly controlled differentiation pattern and eventually formed mature neural grafts. A marker gene, introduced into the ROSA26 locus allowed for precise determination of the fate of the descendants of the transplanted embryoid bodies and revealed that not only neurons but also astrocytes, oligodendrocytes and even microglial cells were graft-derived. Evaluation of long-term experiments showed viable grafts with a stable transgene expression and proved that this approach provides a tool for reliable gene expression within a spatially delimited area of neural tissue.