Neural cultures derived from differentiating embryonic stem (ES) cells are a potentially powerful in vitro model of neural development. We show that neural cells derived from mouse ES cells express mRNAs characteristic of GABAergic neurons. The glutamate decarboxylase genes (Gad1 and Gad2), required for GABA synthesis and the vesicular inhibitory amino acid transporter (Viaat) gene, required for GABA vesicular packaging are activated in the ES-derived cultures. Nearly half of the ES-derived neurons express the GAD67 protein, the product of the Gad1 gene. Building on these results we show that Gad1-lacZ "knockin" reporter ES cell lines can be used to easily monitor Gad1 expression patterns and expression levels during ES differentiation. We also demonstrate that the ES-derived neural progenitors can be infected with retroviruses or transfected with plasmids via lipofection. These experiments outline the basic strategies and methods required for studies of GABAergic gene expression and regulation in ES-derived neuronal cultures.