Alternative assays are highly desirable to reduce the extensive experimental animal use in developmental toxicity testing. In the present study, we developed an improved test system for assessing neurodevelopmental toxicity using differentiating embryonic stem cells. We advanced previously established methods by merging, modifying and abbreviating the original 20-day protocol in to more efficient 13-day neural differentiation protocol. Using morphological observation, immunocytochemistry, gene expression and flow cytometry, it was shown predominantly multiple lineages of neuroectodermal cells were formed in our protocol and to a lower extent, endodermal and mesodermal differentiated cell types. This abbreviated protocol should lead to an advanced screening method using morphology in combination with selected differentiation markers aimed at predicting neurodevelopmental toxicity. Finally, the assay was shown to express differential sensitivity to a model developmental neurotoxicant, methyl mercury.