Mesencephalic precursor cells may one day provide dopaminergic neurons for the treatment of Parkinson's disease. However, the generation of dopaminergic neurons from mesencephalic precursors has been difficult to follow, partly because an appropriate means for recognizing mesencephalic ventricular zone precursors has not been available. To visualize and isolate mesencephalic precursor cells from a mixed population, we used transgenic mice and rats carrying green fluorescent protein (GFP) cDNA under the control of the nestin enhancer. nestin-driven GFP was detected in the mesencephalic ventricular zone, and it colocalized with specific markers for neural precursor cells. In addition, data from flow-cytometry indicated that Prominin/CD133, a cell-surface marker for ventricular zone cells, was expressed specifically in these GFP-positive (GFP(+)) cells. After sorting by fluorescence-activated cell sorting, the GFP(+) cells proliferated in vitro and expressed precursor cell markers but not neuronal markers. Using clonogenic sphere formation assays, we showed that this sorted population was enriched in multipotent precursor cells that could differentiate into both neurons and glia. Importantly, many neurons generated from nestin-GFP-sorted mesencephalic precursors developed a dopaminergic phenotype in vitro. Finally, nestin-GFP(+) cells were transplanted into the striatum of a rat model of Parkinson's disease. Bromodeoxyuridine-tyrosine hydroxylase double-labeling revealed that the transplanted cells generated new dopaminergic neurons within the host striatum. The implanted cells were able to restore dopaminergic function in the host striatum, as assessed by a behavioral measure: recovery from amphetamine-induced rotation. Together, these findings indicate that precursor cells harvested from the embryonic ventral mesencephalon can generate dopaminergic neurons able to restore function to the chemically denervated adult striatum.