Neural stem cells (NSCs) are multipotent cells that have the capacity for self-renewal and for differentiation into the major cell types of the nervous system, i.e. neurons, astrocytes and oligodendrocytes. The molecular mechanisms regulating gene transcription resulting in NSC differentiation and cell lineage specification are slowly being unraveled. An important mechanism in transcriptional regulation is modulation of chromatin by histone acetylation and deacetylation, allowing or blocking the access of transcriptional factors to DNA sequences. The precise involvement of histone acetyltransferases and histone deacetylases (HDACs) in the differentiation of NSCs into mature functional neurons is still to be revealed. In this in vitro study we have investigated the effects of the HDAC inhibitor trichostatin A (TSA) on the differentiation pattern of embryonic mouse NSCs during culture in a minimal, serum-free medium, lacking any induction or growth factor. We demonstrated that under these basic conditions TSA treatment increased neuronal differentiation of the NSCs and decreased astrocyte differentiation. Most strikingly, electrophysiological recordings revealed that in our minimal culture system only TSA-treated NSC-derived neurons developed normal electrophysiological membrane properties characteristic for functional, i.e. excitable and firing, neurons. Furthermore, TSA-treated NSC-derived neurons were characterized by an increased elongation and arborization of the dendrites. Our study shows that chromatin structure modulation by HDACs plays an important role in the transcriptional regulation of the neuronal differentiation of embryonic NSCs particularly as far as the development of functional properties are concerned. Manipulation of HDAC activity may be an important tool to generate specific neuronal populations from NSCs for transplantation purposes.