The utilization of human embryonic stem cells (hESC) for basic and applied research is hampered by limitations in directing their differentiation. Empirical poorly defined methods are currently used to develop cultures enriched for distinct cell types. Here, we report the derivation of neural precursors (NPs) from hESC in a defined culture system that includes the bone morphogenetic protein antagonist noggin. When hESC are cultured as floating aggregates in defined medium and BMP signaling is repressed by noggin, non-neural differentiation is suppressed, and the cell aggregates develop into spheres highly enriched for proliferating NPs. The NPs can differentiate into astrocytes, oligodendrocytes, and mature electrophysiologically functional neurons. During prolonged propagation, the differentiation potential of the NPs shifts from neuronal to glial fate. The presented noggin-dependent controlled conversion of hESC into NPs is valuable for the study of human neurogenesis, the development of new drugs, and is an important step towards the potential utilization of hESC in neural transplantation therapy.