To study the development of human oligodendrocyte precursors (OP), we expanded human embryonic brain-derived neural precursors into spheres with basic fibroblast growth factor (FGF2). Over 90% of the cells in the expanded spheres were precursors coexpressing nestin and the polysialylated (PSA) form of NCAM. The remaining cells were mostly astrocytes and neuronal cells located at the periphery of the floating spheres. When spheres were allowed to adhere on fibronectin-coated substrate in the absence of FGF2, neural precursors migrated in the outgrowth and often formed chains of cells expressing high levels of PSA-NCAM. Many migrating cells also expressed beta-3 tubulin while only scattered elongated cells radiating from the spheres were GFAP+ astrocytes. Spindle-shaped cells not associated with the chains were labeled for the PDGF-alpha receptor and often coexpressed MAP2 neuronal isoforms. Neuronal cells in the outgrowth rapidly established a rich neuritic network where OP expressing O4 and DM20/proteolipid antigens appeared. T3 treatment of neural spheres increased the rate of OP formation and the complexity of their shape. Thus, the generation of human oligodendrocytes from neural precursors is tightly correlated with growth of neuronal processes and enhanced by hormonal signals.