Sox1 is upregulated during ES cell differentiation into neural precursors, and its misexpression causes an EC cell line to differentiate into neurons. Sox1 expression during nervous system development is associated with proliferating cells of the CNS, expression being lost as cells exist mitosis and terminally differentiate. Its expression pattern is more restricted than that of most other markers for early neural cells such as nestin, making it a good marker gene for the study of neural development both in vivo and in vitro from ES cells. Here I have used gene targeting to generate a reporter ES cell line (46C) in which the Sox1 open reading frame is replaced by the gene encoding enhanced green fluorescent protein linked to a selectable marker. The use of EGFP enables the observation of Sox1 expression in live cells. The expression of the reporter faithfully recapitulates the normal expression of Sox1 in vivo in mice generated from the 46C cells. This cell line has been used to analyse the differentiation of ES cells to neural fates, in particular to characterise a newly discovered, monoculture differentiation system. Sox1-EGFP expression is monitored by flow cytometry, which enables quantification of the differentiation process. The effect of proteins and inhibitors implicated in neural determination has been monitored quantitatively and over time using this system. Acquisition of neural fate occurs rapidly in the absence of any inducers or serum, and without formation of multicellular aggregates. BMP-4 completely blocks this neural fate specification, similarly to the situation in the frog and the chick. Collectively, the results indicate that restriction of ES cells pluripotency to neural fates occurs in a manner resembling default neural induction in amphibians.