Current neural induction protocols for human embryonic stem (hES) cells rely on embryoid body formation, stromal feeder co-culture or selective survival conditions. Each strategy has considerable drawbacks, such as poorly defined culture conditions, protracted differentiation and low yield. Here we report that the synergistic action of two inhibitors of SMAD signaling, Noggin and SB431542, is sufficient to induce rapid and complete neural conversion of >80% of hES cells under adherent culture conditions. Temporal fate analysis reveals the appearance of a transient FGF5(+) epiblast-like stage followed by PAX6(+) neural cells competent to form rosettes. Initial cell density determines the ratio of central nervous system and neural crest progeny. Directed differentiation of human induced pluripotent stem (hiPS) cells into midbrain dopamine and spinal motoneurons confirms the robustness and general applicability of the induction protocol. Noggin/SB431542-based neural induction should facilitate the use of hES and hiPS cells in regenerative medicine and disease modeling and obviate the need for protocols based on stromal feeders or embryoid bodies.