Neural stem cells are present both in the developing nervous system and in the adult nervous system of all mammals, including humans. Little is known, however, about the extent to which stem cells in adults can give rise to new neurons. We used immunocytochemistry, electron microscopy, fluorescence microscopy (FM imaging) and electrophysiology to demonstrate that progeny of adult rat neural stem cells, when co-cultured with primary neurons and astrocytes from neonatal hippocampus, develop into electrically active neurons and integrate into neuronal networks with functional synaptic transmission. We also found that functional neurogenesis from adult stem cells is possible in co-culture with astrocytes from neonatal and adult hippocampus. These studies show that neural stem cells derived from adult tissues, like those derived from embryonic tissues, retain the potential to differentiate into functional neurons with essential properties of mature CNS neurons.