Bone marrow stromal stem cells (MSCs) normally differentiate into mesenchymal derivatives but recently have also been converted into neurons, classical ectodermal cells. To begin defining underlying mechanisms, we extended our characterization of MSCs and the differentiated neurons. In addition to expected mesodermal mRNAs, populations and clonal lines of MSCs expressed germinal, endodermal, and ectodermal genes. Thus, the MSCs are apparently “multidifferentiated” in addition to being multipotent. Conversely, the differentiating neurons derived from populations and clonal lines of MSCs expressed the specific markers β‐III tubulin, tau, neurofilament‐M, TOAD‐64, and synaptophysin de novo. The transmitter enzymes tyrosine hydroxylase and choline acetyltransferase were localized to neuronal subpopulations. Our observations suggest that MSCs are already multidifferentiated and that neural differentiation comprises quantitative modulation of gene expression rather than simple on–off switching of neural‐specific genes. © 2002 Wiley‐Liss, Inc.