Human embryonic stem cells (hESCs) represent a promising source of tissues of different cell lineages because of their high degree of self-renewal and their unique ability to give rise to most somatic cell lineages. In this article, we report on a new approach to differentiate hESCs into neural stem cells that can be differentiated further into neuronal restricted cells. We have rapidly and efficiently differentiated hESCs into neural stem cells by presenting the cell adhesion molecule, E-cadherin, to undifferentiated hESCs via E-cadherin transfected fibroblast monolayers. The neural restricted progenitor cells rapidly express nestin and beta-III-tubulin, but not glial fibrillary acidic protein (GFAP) during the 1-week E-cadherin induction phase, suggesting that E-cadherin promotes rapid neuronal differentiation. Further, these cells are able to achieve enhanced neuronal differentiation with the addition of exogenous growth factors. Cadherin-induced hESCs show a loss in Oct4 and nestin expression associated with positive staining for vimentin, neurofilament, and neural cell adhesion molecule. Moreover, blocking by functional E-cadherin antibody and failure of paracrine stimulation suggested that direct E-cadherin engagement is necessary to induce neural restriction. By providing hESCs with molecular cues to promote differentiation, we are able to utilize a specific cell-cell adhesion molecule, E-cadherin, to influence the nature and degree of neural specialization.