Bone marrow stromal cells (MSCs) are an excellent source of cells for treating a variety of central nervous system diseases. In this study, we report the efficient induction of committed neural progenitor cells from rat and human MSCs (NS-MSCs) by introduction of cells with the intracellular domain of Notch-1 followed by growth in the free-floating culture system. NS-MSCs successfully formed spheres, in which cells highly expressed the neural precursor cell markers. The commitment of spheres to neural lineage cells was confirmed by their successful differentiation into neuronal cells when exposed to a differentiation medium. To determine the therapeutic potential of NS-MSCs, cells were transplanted into the cortex and striatum in a rat model of focal cerebral ischemia. The survival, distribution, and integration of NS-MSCs in the host brain were very high, and at day 100, grafted NS-MSCs were positive for dopaminergic, glutamatergic, and γ-amino butyric acid (GABA)ergic neuronal markers. They extended long neurites for nearly 6.3 mm and many of these expressed synaptophysin. Significant behavioral recovery was also observed in limb-placing and water-maze tests. These suggest a high potential for this MSC approach in the replenishment of neural cells for stroke and for a wide range of neurodegenerative conditions that require various types of neural cells.