This past year, we have made significant strides toward the production of inhibitory nerve cells and precursor (MGE) cells from human embryonic stem (ES) and induced pluripotent stem (iPS) cells. These stem cell-derived MGE progenitor cells appropriately mature into inhibitory neurons upon further culture and following transplantation into the newborn mouse brain. Additionally, human ES cell-derived inhibitory neurons possess active membrane properties by electrophysiology analysis. Work is ongoing to determine their functional potential following transplantation: whether these cells can make connections, or synapses, with each other and with neurons in the host brain in order to elevate inhibitory tone in the transplanted animals. Following successful completion of this aim in the coming year, we will be well positioned to examine the therapeutic potential of these cells in pre-clinical epilepsy and Parkinson’s disease animal models.