Mouse embryonic stem (ES) cells grown in feeder-free suspension cultures in the presence of leukemia inhibitory factor (LIF) and basic fibroblast growth factor (bFGF) form spheres that retain pluripotency after multiple passages. ES cell-derived spheres of any passage acquired increased competence to differentiate into neurons over time in culture. Eight-day-old spheres produced many neurons upon plating in differentiation conditions whereas 3-day-old spheres produce none, even after monolayer expansion or treatment with blockers of inhibitory signals, indicating the acquisition of a reversible, proto-neurogenic state during sphere development. Gene expression profiling with oligonucleotide microarrays was used to identify the transcriptional changes accompanying this process. Sphere growth was characterized by down-regulation of a subset of ES cell-expressed genes during the first few days of sphere formation, and progressive up-regulation of novel genes over the course of 1 week in culture. Differential gene expression between 3-day-old and 8 day-old spheres was verified by quantitative real-time PCR experiments. Gene Set Enrichment Analysis (GSEA) of microarray data indicated that neurogenic potential in the late stages of sphere development correlated predominantly with up-regulation of pathways related to mitochondrial function, cell metabolism, oxidative stress, hypoxia, and down-regulation of RNA transcription and proteasome machineries, as well as pathways induced by myc and repressed by retinoic acid. We propose that differences in cellular metabolic state brought about by cell-cell contact and paracrine interactions in the sphere niche may play crucial roles in biasing the early stages of ES cell differentiation toward a neuronal phenotype.