Lipids are often considered membrane components whose function is to embed proteins into cell membranes. In the last two decades, studies on brain lipids have unequivocally demonstrated that many lipids have critical cell signaling functions; they are called “bioactive lipids”. Pioneering work in Dr. Robert Ledeen’s laboratory has shown that two bioactive brain sphingolipids, sphingomyelin and the ganglioside GM1 are major signaling lipids in the nuclear envelope. In addition to derivatives of the sphingolipid ceramide, the bioactive lipids discussed here belong to the classes of terpenoids and steroids, eicosanoids, and lysophospholipids. These lipids act mainly through two mechanisms: 1) direct interaction between the bioactive lipid and a specific protein binding partner such as a lipid receptor, protein kinase or phosphatase, ion exchanger, or other cell signaling protein; and 2) formation of lipid microdomains or rafts that regulate the activity of a group of raft-associated cell signaling proteins. In recent years, a third mechanism has emerged, which invokes lipid second messengers as a regulator for the energy and redox balance of differentiating neural stem cells (NSCs). Interestingly, developmental niches such as the stem cell niche for adult NSC differentiation may also be metabolic compartments that respond to a distinct combination of bioactive lipids. The biological function of these lipids as regulators of NSC differentiation will be reviewed and their application in stem cell therapy discussed.