Neural progenitor cells (NPCs) derived from mouse embryonic stem (mES) cells can lead to tumors after transplantation. The cellular source of such tumors remains under debate. We investigated the tumor formation resulting from mES cell-derived NPCs in a rat stroke model and in nude mice. After 2 hr of ischemia and 48 hr of reperfusion, the NPCs were transplanted into the ischemic core of the xenogeneic rats. Four weeks after transplantation, the grafted cells were found to be viable at the border of the necrosis and had differentiated into neurons. Transplanted rats did not exhibit any behavioral improvement, because tumor formed in 90% of the animals. Immunosuppression facilitated tumor formation. Tumors were observed in 40% of normal rats after NPC transplantation when cyclosporin A was administered. Meanwhile, no tumor formation was observed without cyclosporin A. Ischemic damage also facilitated tumor formation, because NPCs gave rise to tumors in 90% of ischemic rats, a percentage significantly higher than that in intact rats, which was 40%. The SSEA-1-positive cells isolated from stage 4 are not exactly undifferentiated ES cells. They exhibited a marker gene transcription profile different from that of ES cells and did not form tumors in transplanted nude mice. The undifferentiated ES cells remaining after differentiation did not contribute to tumors either. First, the tumor formation rate resulting from undifferentiated ES cells in the brains of normal rats is 0%, significantly lower than that of NPCs. Second, transplanted NPCs that led to 100% tumors in nude mice contained approximately 1.5 × 103 Oct-4-positive cells; however, even 5 × 105 undifferentiated ES cells formed neoplasm only in 40% nude mice. © 2013 Wiley Periodicals, Inc.