Embryonic stem cell (ESC) transplantation offers new therapeutic strategies for neurodegenerative diseases and injury. However, the mechanisms underlying integration and differentiation of engrafted ESCs are poorly understood. This study elucidates the influence of exogenous signals on ESC differentiation using in vitro modelling of non-stem/ stem cell interactions. Methods: Murine ESCs were co-cultured with endothelial cells and astrocytes or conditioned medium obtained from endothelial or astrocyte cultures. After 7 days of co-culture isolated RNA was analysed using RT-PCR for the expression of pluripotency marker oct-4, neural progenitor marker nestin, and neurofilament (NFL), an early marker of neuronal lineage commitment. The presence of the glial cell surface marker A2B5 was determined in ESCs by flow cytometry. Results: Neuronal differentiation was inhibited in ESCs when grown in close vicinity to cerebral endothelial or glial cells. Under these conditions, ESC differentiation was predominantly directed towards a glial fate. However, treatment of ESCs with endothelial cell- or astrocyte-conditioned medium promoted neuronal as well as glial differentiation. Conclusion: Our results indicate that ESC fate is determined by endothelial and glial cells that comprise the environmental niche of these stem cells in vivo. The direction of differentiation processes appears to be dependent on humoral factors secreted by adjacent cell lines.