Transplantation of neural stem cells (NSCs) is a novel strategy to restore function in the diseased brain, acting through multiple mechanisms, for example, neuronal replacement, neuroprotection, and modulation of inflammation. Whether transplanted NSCs can operate by fusing with microglial cells or mature neurons is largely unknown. Here, we have studied the interaction of a mouse embryonic stem cell-derived neural stem (NS) cell line with rat and mouse microglia and neurons in vitro and in vivo. We show that NS cells spontaneously fuse with cocultured cortical neurons, and that this process requires the presence of microglia. Our in vitro data indicate that the NS cells can first fuse with microglia and then with neurons. The fused NS/microglial cells express markers and retain genetic and functional characteristics of both parental cell types, being able to respond to microglia-specific stimuli (LPS and IL-4/IL-13) and to differentiate to neurons and astrocytes. The NS cells fuse with microglia, at least partly, through interaction between phosphatidylserine exposed on the surface of NS cells and CD36 receptor on microglia. Transplantation of NS cells into rodent cortex results in fusion with mature pyramidal neurons, which often carry two nuclei, a process probably mediated by microglia. The fusogenic role of microglia could be even more important after NSC transplantation into brains affected by neurodegenerative diseases associated with microglia activation. It remains to be elucidated how the occurrence of the fused cells will influence the functional outcome after NSC transplantation in the diseased brain.