Author SummaryStem cells are providing insight into embryo development and offering new approaches to clinical and therapeutic research. In part this progress arises from “directed differentiation” – artificially controlling the types of cells produced from stem cells. Here we describe the directed differentiation of mouse and human pluripotent stem cells into cells of the spinal cord and paraxial mesoderm (the tissue that generates muscle and bone that is normally found adjacent to the spinal cord). During embryo development, spinal cord and paraxial mesoderm arise from a shared group of precursors known as neuromesodermal progenitors (NMPs). We show that signals to which NMPs are exposed in embryos can be used to generate NMPs from pluripotent stem cells in a dish. We define conditions for the conversion of these NMPs into either spinal cord or mesoderm cells. Using these conditions, we provide evidence that the decision between spinal cord and mesoderm involves a gene, Brachyury, that promotes mesoderm production by inhibiting spinal cord generation. Together the data illustrate how mimicking normal embryonic development allows the generation of specific cell types from stem cells and that this can be used to analyse cells that are otherwise difficult to study.