Neural stem cells (NSCs) play an essential role in both the developing embryonic nervous system through to adulthood where the capacity for self-renewal may be important for normal function of the CNS, such as in learning, memory and response to injury. There has been much excitement about the possibility of transplantation of NSCs to replace damaged or lost neurones, or by recruitment of endogenous precursors. However, before the full potential of NSCs can be realized, it is essential to understand the physiological pathways that control their proliferation and differentiation, as well as the influence of extrinsic factors on these processes. In the present study we used the NSC line C17.2 and primary embryonic cortical NSCs (cNSCs) to investigate the effects of the environmental contaminant methylmercury (MeHg) on survival and differentiation of NSCs. The results show that NSCs, in particular cNSCs, are highly sensitive to MeHg. MeHg induced apoptosis in both models via Bax activation, cytochrome c translocation, and caspase and calpain activation. Remarkably, exposure to MeHg at concentrations comparable to the current developmental exposure (via cord blood) of the general population in many countries inhibited spontaneous neuronal differentiation of NSCs. Our studies also identified the intracellular pathway leading to MeHg-induced apoptosis, and indicate that NSCs are more sensitive than differentiated neurones or glia to MeHg-induced cytotoxicity. The observed effects of MeHg on NSC differentiation offer new perspectives for evaluating the biological significance of MeHg exposure at low levels.