Human embryonic stem cells (hESCs) demonstrate remarkable proliferative and developmental capacity. Clinical interest arises from their ability to provide an apparently unlimited cell supply for transplantation, and from the hope that they can be directed to desirable phenotypes in high purity. Here we present for the first time a method for obtaining oligodendrocytes and their progenitors in high yield from hESCs. We expanded hESCs, promoted their differentiation into oligodendroglial progenitors, amplified those progenitors, and then promoted oligodendroglial differentiation using positive selection and mechanical enrichment. Transplantation into the shiverer model of dysmyelination resulted in integration, differentiation into oligodendrocytes, and compact myelin formation, demonstrating that these cells display a functional phenotype. This differentiation protocol provides a means of generating human oligodendroglial lineage cells in high purity, for use in studies of lineage development, screening assays of oligodendroglial‐specific compounds, and treating neurodegenerative diseases and traumatic injuries to the adult CNS. © 2004 Wiley‐Liss, Inc.