Stem cells and progenitor cells derived from the developing human brain have been shown to differentiate into neurons and astrocytes. However, few studies have examined the functional, physiological properties of these differentiated neurons and astrocytes. In this study we have used immunocytochemistry in combination with electrophysiology to examine protein machinery and functional properties of neurons and astrocytes differentiated from human brain progenitor cells (hBPCs). Our results show that serum induces mainly astrocytic phenotype cells that express GFAP and have physiological properties that are typical of astrocytes. hBPCs differentiated with BDNF and PDGF develop mainly into neurons expressing mature neuronal proteins MAP-2, synaptobrevin II and vesicular glutamate transporter I in the process, plus a small population of GFAP-positive radial cells. Based on electrophysiology of BDNF/PDGF-treated cells two classes of cell were identified. Class I cells have functional neuronal properties, including functional voltage-gated Na+ and K+ currents, functional AMPA receptors and the ability to generate action potentials. A smaller subpopulation of cells (Class II cells) expresses GFAP and exhibit functional properties of astrocytes, including linear current–voltage relationship and dye-coupling.