Microglia are considered the only cell population of mesodermal origin in the brain, although their role is not fully understood. The present study demonstrated that rat primary microglial cells expressed nestin, A2B5, and O4 antigens, which are markers for oligodendrocyte precursor cells. Based on these findings, we investigated whether microglial cells generated neurons or macroglial cells. Purified microglial cells were cultured in the presence of 10% fetal bovine serum for 3 days, followed by culture in the presence of 70% serum for 2 days. During the two-step culture, microglial cells became highly proliferative and strongly expressed inhibitor of DNA binding (Id) genes, indicative of dedifferentiation of the cells. The dedifferentiated cells also expressed transcription factors that promote differentiation into neurons or macroglial cells. When the dedifferentiated cells were transferred into serum-free medium on poly-L-lysine-coated substrate, a substantial number of the cells rapidly turned into long process-bearing cells, which expressed microtubule-associated protein 2, synapsin I, neurofilament proteins, glial fibrillary acidic protein, or galactocerebroside. When microglial cells were fluorescently labeled through acetylated low-density lipoprotein (LDL) receptors or by a phagocytosis-dependent mechanism, fluorescence-bearing neurons, astrocytes, or oligodendrocytes were observed. Neurospheres, aggregates of neural stem cells, expressed Musashi 1 and epidermal growth factor receptor, but the microglia-derived cells did not. These results suggest a novel role of microglia as multipotential stem cells to give rise to neurons, astrocytes, or oligodendrocytes.