Neural stem cells (NSCs) yield both neuronal and glial progeny, but their differentiation potential toward multiple region-specific neuron types remains remarkably poor. In contrast, embryonic stem cell (ESC) progeny readily yield region-specific neuronal fates in response to appropriate developmental signals. Here we demonstrate prospective and clonal isolation of neural rosette cells (termed R-NSCs), a novel NSC type with broad differentiation potential toward CNS and PNS fates and capable of in vivo engraftment. R-NSCs can be derived from human and mouse ESCs or from neural plate stage embryos. While R-NSCs express markers classically associated with NSC fate, we identified a set of genes that specifically mark the R-NSC state. Maintenance of R-NSCs is promoted by activation of SHH and Notch pathways. In the absence of these signals, R-NSCs rapidly lose rosette organization and progress to a more restricted NSC stage. We propose that R-NSCs represent the first characterized NSC stage capable of responding to patterning cues that direct differentiation toward region-specific neuronal fates. In addition, the R-NSC-specific genetic markers presented here offer new tools for harnessing the differentiation potential of human ESCs.