Because the average human life span has recently increased, the number of patients who are diagnosed with neurodegenerative diseases has escalated. Recent advances in stem cell research have given us access to unlimited numbers of multi-potent or pluripotent cells for screening for new drugs for neurodegenerative diseases. Neural stem cells (NSCs) are a good model with which to screen effective drugs that increase neurogenesis. Recent technologies for human embryonic stem cells (ESCs) or induced pluripotent stem cells (iPSCs) can provide human cells that harbour specific neurodegenerative disease. This article discusses the use of NSCs, ESCs and iPSCs for neurodegenerative drug screening and toxicity evaluation. In addition, we introduce drugs or natural products that are recently identified to affect the stem cell fate to generate neurons or glia.