Research on the use of stem cells for rehabilitation was originally motivated by the potential for direct development of new neurons from stem cells that might replace lost neurons that are at the center of pathophysiology. For example, in degenerative illnesses such as Parkinson's disease and Amyotrophic Lateral Sclerosis, specific populations of neurons, dopaminergic cells and spinal motor neurons respectively, are progressively lost. Stem cell research has sought to use either embryonic or other types of stem cells to generate replacement neurons that could be transplanted and incorporated into the CNS of patients (for a Review, see Hynes and Rosenthal, 2000). This work has required knowledge acquired from animal models of the transcription and signaling factors that determine dopaminergic and spinal motor neuron fate and maturation. As researchers have pursued this goal, it has been shown that stem cells in animal model transplant recipients may have an indirect trophic role, i.e., reducing cell death, increasing metabolic functions and protecting remaining neurons from insults (Jung et al., 2004; Rafuse et al., 2005; Yasuhara et al., 2006). These findings may hold promise for future application of stem cell-derived therapies to neuropsychiatric disorders. Disorders such as schizophrenia and depression may have a neurodegenerative component, similar to neurological disorders for which the supportive role of stem cells has been demonstrated. The regions of the brain involved may be different for major affective and psychotic disorders than degenerative motor diseases – e.g., cortex and hippocampus – but these regions may be even better candidates for the application of stem cell support therapy given their nearby neurogenic zones. Extrinsic factors that influence the stem cell niches, like FGF and BMPs, will likely have an important role to play in these potential therapies.