Central nervous system (CNS) stem cells from the early embryo may have a number of important advantages as donor material for the delivery of foreign genes into the diseased adult CNS. Mesencephalic neural plates from transgenic mice (GT4-2) were used as a source of CNS stem cells to determine whether transgene expressing embryonic CNS progenitor cells can be used as donor material for implantation into the adult brain. Transgenic mouse embryos from this GT4-2 line express the Escherichia coli β-galactosidase (β-gal) gene throughout early CNS development. At embryonic day 8.5, mesencephalic neural plate tissue from heterozygous embryos was immediately implanted into the striatum of either adult CD 1 mice or 6-hydroxydopamine-treated rats. Grafts of transgenic neural plate tissue in the normal adult mouse striatum, sampled 2 weeks to one year after implantation, possessed healthy β-gal-positive cells. More detailed analysis of allogeneic grafts 3 months after implantation indicated that most β-gal-positive cells were also immunoreactive for neurofilament and microtubule associated proteins, two neuron-specific markers. In addition, extensive neurofilament-positive axonal tangles were evident within the grafts among the β-gal-positive cells. Electron microscopic (EM) findings of one-month implanted allogeneic tissues stained with Bluo-Gal revealed many β-gal-positive neurons receiving synaptic contacts from other cells. One-year allografts also had many tyrosine hydroxylase-immunoreactive cells. No evidence of immunological rejection, or of significant decrease in graft volume, was seen at any age in these allografts. In contrast, only a few β-gal-positive cells were seen in the xenogeneic host striatum 11 days after immplantation. These data suggest that transgenic neural plate tissue is able to contribute long-surviving neurons that can extend axons vigorously and make synaptic contacts with other cells in the adult allogeneic CNS environment.