Little is known about how neural stem cells are formed initially during development. We investigated whether a default mechanism of neural specification could regulate acquisition of neural stem cell identity directly from embryonic stem (ES) cells. ES cells cultured in defined, low-density conditions readily acquire a neural identity. We characterize a novel primitive neural stem cell as a component of neural lineage specification that is negatively regulated by TGFβ-related signaling. Primitive neural stem cells have distinct growth factor requirements, express neural precursor markers, generate neurons and glia in vitro, and have neural and non-neural lineage potential in vivo. These results are consistent with a default mechanism for neural fate specification and support a model whereby definitive neural stem cell formation is preceded by a primitive neural stem cell stage during neural lineage commitment.