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Self-renewing, totipotent embryonic stem (ES) cells may provide a virtually unlimited donor source for transplantation. A protocol that permits the in vitro generation of precursors for oligodendrocytes and astrocytes from ES cells was devised. Transplantation in a rat model of a human myelin disease shows that these ES cell–derived precursors interact with host neurons and efficiently myelinate axons in brain and spinal cord. Thus, ES cells can serve as a valuable source of cell type–specific somatic precursors for neural transplantation.