Neuronal loss within the central nervous system (CNS) has been considered an irreversible process, as cells within the mammalian CNS fail to regenerate after degeneration and trauma. Neural stem (and progenitor) cells have been proposed as a potential source of new neurons. This investigation describes the fate of neural progenitor cells both in vitro and after transplantation. Progenitor cells were isolated from the brains of neonatal green fluorescent protein (GFP) expressing mice thereby allowing cells to be easily visualized both in culture and after transplantation. We have shown brain-derived progenitor cells (BPCs) can be maintained in defined conditions and are capable of neurogenesis and gliogenesis. Cells adopted characteristic morphologies and phenotypes of both neurons and glia as determined by immunocytochemistry. To determine the potential of BPCs to undergo neurogenesis and specifically retinogenesis we adopted three approaches: (1) transplantation, (2) coculture and (3) induction/treatment with a developmental cue. We have shown brain progenitor cells can incorporate into the developing retina and adopt characteristic morphologies and phenotypes. Furthermore, using immunocytochemistry we show BPCs expressed proteins typical of surrounding retinal neurons. We further analyzed the potential of BPCs to adopt retinal fates using P1 mouse retina in a coculture system with BPCs. When cocultured with P1 retina but not P7 retina BPCs expressed rhodopsin a protein restricted to photoreceptors. Furthermore, rhodopsin expression was induced by a soluble factor and not cell-contact mediated. BPCs have been shown to adopt neuronal fates, yet not synaptic structures. Using cholesterol as a potential differentiation cue and developmental factor we treated BPCs and analyzed their fates in vitro. Cholesterol induced dramatic morphological differentiation and pre and post synaptic protein expression among BPCs. This investigation provides the first description of brain-derived cells undergoing retinalization and illustrates the most dramatic integration of stem/progenitor cells within the CNS. The ability to produce 'neurons' from neural progenitor cells both in vitro and in vivo has tremendous implications for treating numerous conditions.