Schematic of the stages in the differentiation of PSCs. The starting material, undifferentiated PSCs (1), progresses through four transitions, each time becoming more lineage restricted. The first transition is loss of pluripotency (stage 2), which is usually accomplished by the formation of embryoid bodies. At stage (3), neural rosettes have formed. These are the anlage of the nervous system and can be thought of as consisting of neural stem cells with the greatest degree of multipotentiality. At stage (4), a certain degree of lineage restriction, within the neural lineage, has taken place. This is indicated by a broken ring. These cells tend to further differentiate toward a particular mature neural lineage, although under some circumstances a residual plasticity can still be demonstrated. At stage (5), neural cells of a particular lineage have been produced and there is little interchangeability among them, again illustrated by the breaks in the circle. These include oligodendroglia, astroglia and neurons of anterior, posterior, or retinal derivation.