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Human embryonic stem cells are derived from inner cell mass of early stage blastocyst embryos. These cells are pluripotent and can differentiate into functional neurons and various nerve cells under appropriate conditions. However, one of the biggest challenges in this area is to establish a renewable, easy-to-culture, neural lineage-linked neural precursor cell population. It is therefore crucial to conveniently differentiate human embryonic stem cells into precursor cells, maintain them as a self-renewing population and achieve nerve cell types from different regions as a pure population. Cell signals and their associated molecules also play an important role in these events. For the generation of neural precursor cells, a better understanding of stem cell biology and the important pathways involved in differentiation into neural cells is required. This review focuses on the differentiation methods from stem cells to neural cells and the signaling pathways and molecules that are important in this process.