Human neurons derived from stem cells can be employed as in vitro models to predict the potential of neurochemicals affecting neurodevelopmental cellular processes including proliferation, migration, and differentiation. Here, we developed a model of differentiating human neurons from well characterized human embryonal carcinoma stem cells (NT2). NT2 cells were induced to differentiate into neuronal phenotypes after 2 weeks of treatment with retinoic acid in aggregate culture. Nestin positive progenitor cells migrate out of NT2 aggregates and differentiate into βIII-tubulin expressing neuronal cells. Culturing the NT2 cells for an additional 7-14 days resulted in increased percentage of βIII-tubulin expressing cells, elaborating a long neurite that positively stained for axonal marker (Tau) and presynaptic protein (synapsin). We then asked whether neurite outgrowth from NT2 cells is modulated by bioactive chemicals. Since the cAMP/PKA pathway has been widely investigated as a regulator of neurite outgrowth/regeneration in several experimental systems, we used chemical activators and inhibitors of cAMP/PKA pathway in the culture. The adenylyl cyclase activator, forskolin, and cell-permeable analog of cAMP, 8-Br-cAMP increased the percentage of neurite bearing cells and neurite extension. Application of the protein kinase A inhibitors, H-89 and Rp-cAMP, blocked neurite formation. Taken together, NT2 aggregates undergo migration, differentiation, and neurite elaboration and can be used as a model of differentiating human neurons to screen neurochemicals and to understand cellular mechanisms of human nerve cell development.