Understanding mechanisms that govern cell fate decisions will lead to developing techniques for induction of adult stem cell differentiation to desired cell outcomes and, thus, production of an autologos source of cells for regenerative medicine. Recently, we demonstrated that stem cells derived from adult central nervous system or bone marrow grown with other cell lineages or with more undifferentiated cells sometimes take on those characteristics. This indicates that manipulating extracellular factors may be sufficient to alter some developmental restrictions regulated by the epigenetic system. In this study, using pharmacological agents that interfere with the main components of the epigenetic program such as DNA methylation and histone deacetylation, we induce high-level expression of embryonic and neural stem cell (NSC) marker Sox2 in bone marrow-derived mesenchymal stem cells (MSCs). Exposure of these modified cells to a neural environment via juxtacrine and paracrine interactions promote efficient generation of neural stem-like cells as well as cells with neuronal and glial characteristics. We concluded that the manipulation strategy used in this study can be a useful method for efficient production of NSC-like cells from MSCs. J. Cell. Biochem. 100: 362–371, 2007. © 2006 Wiley-Liss, Inc.