Neural trauma, such as traumatic brain injury or stroke, results in a vigorous inflammatory response at and near the site of injury, with cytokine production by endogenous glial cells and invading immune cells. Little is known of the effect that these cytokines have on neural stem cell function. Here we examine the effects of two inflammatory cytokines, interferon-gamma (IFN gamma) and tumour necrosis factor-alpha (TNFalpha), on adult neural stem cells. Neural stem cells grown in the presence of either cytokine failed to generate neurospheres. Cytotoxicity assays showed that TNF alpha but not IFN gamma was toxic to the neural stem cells under proliferative conditions. Under differentiating conditions, neither cytokine was toxic; however, IFN gamma enhanced neuronal differentiation, rapidly increasing beta III-tubulin positive cell numbers 3-4 fold and inhibiting astrocyte generation. Furthermore, neurite outgrowth and the number of neurites per neuron was enhanced in cells differentiated in the presence of IFN gamma. Therefore, both inflammatory cytokines examined have substantial, but different effects on neural stem cell function and suggests that regulation of the inflammatory environment following brain injury may influence the ability of neural stem cells to repair the damage.