Nodal, a member of the TGF-beta family of signaling molecules, has been implicated in pluripotency in human embryonic stem cells (hESCs) [Vallier, L., Reynolds, D., Pedersen, R.A., 2004a. Nodal inhibits differentiation of human embryonic stem cells along the neuroectodermal default pathway. Dev. Biol. 275, 403-421], a finding that seems paradoxical given Nodal's central role in mesoderm/endoderm specification during gastrulation. In this study, we sought to clarify the role of Nodal signaling during hESC differentiation by constitutive overexpression of the endogenous Nodal inhibitors Lefty2 (Lefty) and truncated Cerberus (Cerb-S) and by pharmacological interference using the Nodal receptor antagonist SB431542. Compared to wildtype (WT) controls, embryoid bodies (EBs) derived from either Lefty or Cerb-S overexpressing hESCs showed increased expression of neuroectoderm markers Sox1, Sox3, and Nestin. Conversely, they were negative for a definitive endoderm marker (Sox17) and did not generate beating cardiomyocyte structures in conditions that allowed mesendoderm differentiation from WT hESCs. EBs derived from either Lefty or Cerb-S expressing hESCs also contained a greater abundance of neural rosette structures as compared to controls. Differentiating EBs derived from Lefty expressing hESCs generated a dense network of beta-tubulin III positive neurites, and when Lefty expressing hESCs were grown as a monolayer and allowed to differentiate, they generated significantly higher numbers of beta-tubulin positive neurons as compared to wildtype hESCs. SB431542 treatments reproduced the neuralising effects of Lefty overexpression in hESCs. These results show that inhibition of Nodal signaling promotes neuronal specification, indicating a role for this pathway in controlling early neural development of pluripotent cells.