Exposure to arsenic in food and drinking water has been correlated with adverse developmental outcomes, such as reductions in birth weight and neurological deficits. Additionally, studies have shown that arsenic suppresses sensory neuron formation and skeletal muscle myogenesis, although the reason why arsenic targets both of these cell types in unclear. Thus, P19 mouse embryonic stem cells were used to investigate the mechanisms by which arsenic could inhibit cellular differentiation. P19 cells were exposed to 0, 0.1, or 0.5 μM sodium arsenite and induced to form embryoid bodies over a period of 5 days. The expression of transcription factors necessary to form neural plate border specifier (NPBS) cells, neural crest cells and their progenitors, and myocytes and their progenitors were examined. Early during differentiation, arsenic significantly reduced the transcript and protein expression of Msx1 and Pax3, both needed for NPBS cell formation. Arsenic also significantly reduced the protein expression of Sox 10, needed for neural crest progenitor cell production, by 31-50%, and downregulated the protein and mRNA levels of NeuroD1, needed for neural crest cell differentiation, in a time- and dose-dependent manner. While the overall protein expression of transcription factors in the skeletal muscle lineage was not changed, arsenic did alter their nuclear localization. MyoD nuclear translocation was significantly reduced on days 2-5 between 15 and 70%. At a 10-fold lower concentration, monomethylarsonous acid (MMA III) appeared to be just as potent as inorganic arsenic at reducing the mRNA levels Pax3 (79% vs84%), Sox10 (49% vs 65%), and Msx1 (56% vs 56%). Dimethylarsinous acid (DMA III) also reduced protein and transcript expression, but the changes were less dramatic than those with MMA or arsenite. All three arsenic species reduced the nuclear localization of MyoD and NeuroD1 in a similar manner. The early changes in the differentiation of neural plate border specifier cells may provide a mechanism for arsenic to suppress both neurogenesis and myogenesis.