The developmental potential of a uniform population of neural progenitors was tested by implanting them into chick embryos. These cells were generated from retinoic acid-treated mouse embryonic stem (ES) cells, and were used to replace a segment of the neural tube. At the time of implantation, the progenitors expressed markers defining them as Pax6-positive radial glial (RG) cells, which have recently been shown to generate most pyramidal neurons in the developing cerebral cortex. Six days after implantation, the progenitors generated large numbers of neurons in the spinal cord, and differentiated into interneurons and motoneurons at appropriate locations. They also colonized the host dorsal root ganglia (DRG) and differentiated into neurons, but, unlike stem cell-derived motoneurons, they failed to elongate axons out of the DRG. In addition, they neither expressed the DRG marker Brn3a nor the Trk neurotrophin receptors. Control experiments with untreated ES cells indicated that when colonizing the DRG, these cells did elongate axons and expressed Brn3a, as well as Trk receptors. Our results thus indicate that ES cell-derived progenitors with RG characteristics generate neurons in the spinal cord and the DRG. They are able to respond appropriately to local cues in the spinal cord, but not in the DRG, indicating that they are restricted in their developmental potential.