Many neurodegenerative diseases are attributed to the degeneration of neurons with subsequent functional loss. Cell transplantation is a strategy with potential for treating such diseases, and many kinds of cells are considered candidates for transplantation therapy. Bone marrow stromal cells (MSCs) have great potential as therapeutic agents, as they are easy to isolate and expand from patients without serious ethical and technical problems. The authors have found a method for the highly efficient, exclusive and specific induction of functional postmitotic neuronal cells from both rat and human MSCs. Gene transfer of Notch intracellular domain (NICD) followed by the administration of certain trophic factors induced mature neurons expressing neuronal markers, some of which showed action potentials. Induced neurons were transplanted to animal models of neurodegenerative disorders, including Parkinson's disease and ischaemic brain injury, resulting in the successful integration of transplanted cells and improvement in function of the transplanted animals. This review summarises the respective potentials, benefits and drawbacks of MSC-derived neurons, and discusses the possibility of their clinical application in neurodegenerative diseases.