Embryonic stem cells can transform themselves into any kind of cell, including neurons. But neurons made out of stem cells won't be much use if, after implantation, they don't connect properly other brain cells. And no one had yet proven that this connection could be made. Now, though, that milestone has been reached, according to this paper in the January 20 Journal of Neuroscience.
James M. Weimann and his colleagues at Stanford Medical School cultured mouse stem cells into neurons, then transplanted these into the cortices of newborn mice. The new neurons behaved like their home-grown neighbors: they grew long nerve fibers that extended to the right brain regions and the spinal cord. For example, cells implanted in the visual cortex (where pulses from the optic nerve are interpreted) linked properly to the colliculus, a midbrain region where sights are related to bodily movements. But cells implanted in the motor cortex (which controls voluntary motion) correctly linked to the spinal cord. They extended their axons to the right places for their function, and avoided the wrong ones.
Your newborn mouse is different, of course, from your elderly human Parkinson's patient, so this result doesn't mean stem-cell brain treatments are coming soon to a clinic near you. But it is a major step in that direction.