Mesenchymal stem cells (MSCs) exhibit immune-suppressive properties, follow a pattern of multilineage differentiation, and exhibit transdifferentiation potential. Ease in expansion from adult bone marrow, as well as its separation from ethical issues, makes MSCs appealing for clinical application. MSCs treated with retinoic acid resulted in synaptic transmission, based on immunostaining of synaptophysin and electrophysiological studies. In situ hybridization indicated that the neurotransmitter gene preprotachykinin-I was expressed in these cells. However, translation of this gene only occurred after stimulation with interleukin (IL)-1α. This effect was blunted by costimulation with IL-1 receptor antagonist. This study reports on the ability of MSCs to be transdifferentiated into neurons with functional synapses with the potential to become polarized towards producing specific neurotransmitters.