Substantial progress has been made in the development of methods to direct embryonic stem cells to differentiate into various regions of the central nervous system (CNS). We have used the current model of eye specification to develop a protocol for directing human embryonic stem cells to generate retinal progenitors and various types of retinal neurons. Our method uses a multistep protocol in which embryoid bodies are treated with inhibitors of both BMP signaling and canonical Wnt signaling to promote expression of key eye field transcription factors (EFTFs), as assayed by RT-PCR and immunofluorescence microscopy. The retinal progenitor cells spontaneously undergo differentiation into various types of retinal neurons, including photoreceptors, and this can be promoted by treatment with small molecule inhibitors of the Notch pathway.