Significant progress in neural transplantation has been observed over the last several decades. As a neuroanatomical tool, neural transplantation studies are able to examine the mechanisms involved in the development and integration of neurons into the complex neural circuitries of the brain. Today, embryonic neural tissue can be successfully transplanted as solid tissue chunks or as dissociated cell suspensions. Within the parenchyma of the brain, transplanted embryonic neurons develop mature morphology and do not appear to invoke an immunological response by the lost immune system. Not only do these neurons exhibit robust development but there is also evidence that transplanted neurons restore some degree of function to neurologically damaged circuitry; however, the extent of reintegration into the host neural circuitry still remains unclear. Moreover, the long-term survival and functioning of transplanted nerve cells also remains an unanswered question. Advances in the emerging field of genetic engineering may eventually lead to genetically modified neurons that are capable of synthesizing neurotrophic factors or missing neurotransmitters and restoring function in brain-damaged areas. The use of neural transplantation to replace damaged nerve cells in neurodegenerative disorders, such as Alzheimer's or Parkinson's disease, is promising based on our current knowledge. However, our basic scientific knowledge of neural transplants is incomplete and warrants a prudent approach toward application of neural transplantation techniques in clinical research.