Dopamine (DA) neurons derived from human embryonic stem cells (hESCs) are a promising unlimited source of cells for cell replacement therapy in Parkinson's disease (PD). A number of studies have demonstrated functionality of DA neurons originating from hESCs when grafted to the striatum of rodent and non-human primate models of PD. However, several questions remain in regard to their axonal outgrowth potential and capacity to integrate into host circuitry. Here, ventral midbrain (VM) patterned hESC-derived progenitors were grafted into the midbrain of 6-hydroxydopamine-lesioned rats, and analyzed at 6, 18, and 24 weeks for a time-course evaluation of specificity and extent of graft-derived fiber outgrowth as well as potential for functional recovery. To investigate synaptic integration of the transplanted cells, we used rabies-based monosynaptic tracing to reveal the origin and extent of host presynaptic inputs to grafts at 6 weeks. The results reveal the capacity of grafted neurons to extend axonal projections toward appropriate forebrain target structures progressively over 24 weeks. The timing and extent of graft-derived dopaminergic fibers innervating the dorsolateral striatum matched reduction in amphetamine-induced rotational asymmetry in the animals where recovery could be observed. Monosynaptic tracing demonstrated that grafted cells integrate with host circuitry 6 weeks after transplantation, in a manner that is comparable with endogenous midbrain connectivity. Thus, we demonstrate that VM patterned hESC-derived progenitors grafted to midbrain have the capacity to extensively innervate appropriate forebrain targets, integrate into the host circuitry and that functional recovery can be achieved when grafting fetal or hESC-derived DA neurons to the midbrain.