Induced pluripotent stem (iPS) cells are pluripotent stem cells directly reprogrammed from cultured mouse fibroblast by introducing Oct3/4, Sox2, c-Myc, and Klf4. Cells obtained using this technology, which allows the ethical issues and immunological rejection associated with embryonic stem (ES) cells to be avoided, might be a clinically useful source for cell replacement therapics. Here we demonstrate that murine iPS cells formed neurospheres that produced electrophysiologically functional neurons, astrocytes, and oligodendrocytes. Secondary neurospheres (SNSs) generated from various mouse iPS cell showed their neural differentiation capacity and teratoma formation after transplantation into the brain of immunodeficient NOD/SCID mice. We found that origin (source of somatic cells) of the iPS cells are the crucial determinant for the potential tumorigenicity of iPS-derived neural stem/progenitor cclls and that their tumorigenicity results from the persistent presence of undifferentiated cells within the SNSs. Furthermore, transplantation of non-tumorigenic Nanog-iPS-derived SNSs into mouse spinal cord injury (SCI) model promoted locomotor function recovery. Surprisingly, SNSs derived from c-Myc minus iPS cells generated without drug selection showed robust tumorigenesis, in spite of their potential to contribute adult chimeric mice without tumor formation.