Although implantation of fetal dopamine (DA) neurons can reduce parkinsonism in patients, current methods are rudimentary, and a reliable donor cell source is lacking. We show that transplanting low doses of undifferentiated mouse embryonic stem (ES) cells into the rat striatum results in a proliferation of ES cells into fully differentiated DA neurons. ES cell-derived DA neurons caused gradual and sustained behavioral restoration of DA-mediated motor asymmetry. Behavioral recovery paralleled in vivo positron emission tomography and functional magnetic resonance imaging data demonstrating DA-mediated hemodynamic changes in the striatum and associated brain circuitry. These results demonstrate that transplanted ES cells can develop spontaneously into DA neurons. Such DA neurons can restore cerebral function and behavior in an animal model of Parkinson's disease.