We report the generation of functional dopaminergic neurons from human embryonic stem cells (hESCs) using a growth factor mediated multistep EB protocol and its therapeutic effects in vivo. Embryoid bodies (EBs) were cultured in insulin-transferrin-selenium fibronectin (ITSFn) media for the selection of neural precursor cells (NPC). The selected cells on exposure to N2 media supplemented with EGF, bFGF initially aggregated to generate spontaneous free floating neurospheres and on exposure to signaling molecules Shh and FGF-8 differentiated into dopaminergic neurons (40% TH+ cells/total neurons). The differentiated NPC expressed dopaminergic specific markers both at cellular and molecular levels. They secreted detectable levels of dopamine into the culture supernatant. The most unique feature of our protocol is the generation of free floating neurospheres which can be expanded for a longer period without losing their capability to differentiate into DA neurons. Further, transplantation of NPCs into the substantia nigra of 6-OHDA lesioned rat model of Parkinson's disease elicited significant reversal of lesion induced motor deficits which was sustained upto the end of 1 year long study period. Immunohistochemical studies of the grafted area one year post transplantation revealed that transplanted hESC derived neural precursor cells survived, integrated in vivo and differentiated into dopaminergic neurons without teratoma formation. In summary, our results encourage the potential use of hESC derived dopaminergic neurons for future clinical application in Parkinson's disease. (C) 2008 Elsevier Inc. All rights reserved.