Nitric oxide (NO) is a short lived diatomic free radical species synthesized by nitric oxide synthases (NOS). The physiological roles of NO depend on its local concentrations as well as availability and the nature of downstream target molecules. At low nanomolar concentrations, activation of soluble guanylyl cyclase (sGC) is the major event initiated by NO. The resulting elevation in the intracellular cyclic GMP (cGMP) levels serves as signals for regulating diverse cellular and physiological processes. The participation of NO and cGMP in diverse physiological processes is made possible through cell type specific spatio-temporal regulation of NO and cGMP synthesis and signal diversity downstream of cGMP achieved through specific target selection. Thus cyclic GMP directly regulates the activities of its downstream effectors such as Protein Kinase G (PKG), Cyclic Nucleotide Gated channels (CNG) and Cyclic nucleotide phosphodiesterases, which in turn regulate the activities of a number of proteins that are involved in regulating diverse cellular and physiological processes. Localization and activity of the NO-cGMP signaling pathway components are regulated by G-protein coupled receptors, receptor and non receptor tyrosine kinases, phosphatases and other signaling molecules. NO also serves as a powerful paracrine factor. At micromolar concentrations, NO reacts with superoxide anion to form reactive peroxinitrite, thereby leading to the oxidation of important cellular proteins. Extensive research efforts over the past two decades have shown that NO is an important modulator of axon outgrowth and guidance, synaptic plasticity, neural precursor proliferation as well as neuronal survival. Excessive NO production as that evoked by inflammatory signals has been identified as one of the major causative reasons for the pathogenesis of a number of neurodegenerative diseases such as ALS, Alzheimers and Parkinson diseases. Regenerative therapies involving transplantation of embryonic stem cells (ES cells) and ES cell derived lineage committed neural precursor cells have recently shown promising results in animal models of Parkinson disease (PD). Recent studies from our laboratory have shown that a functional NO-cGMP signaling system is operative early during the differentiation of embryonic stem cells. The cell type specific, spatio-temporally regulated NO-cGMP signaling pathways are well suited for inductive signals to use them for important cell fate decision making and lineage commitment processes. We believe that manipulating the NO-cGMP signaling system will be an important tool for large scale generation of lineage committed precursor cells to be used for regenerative therapies.