Neural progenitor cells (NPCs) are suggested to be a valuable source of cell transplant in treatment of various neurological diseases because of their distinct attributes. They can be expanded and induced to differentiate in vitro. However, it remains uncertain whether in vitro expanded NPCs have the capacity to give rise to functional motoneurons after transplantation in vivo. Here, we showed that in vitro expanded NPCs, when transplanted into the musculocutaneous nerve, generated motoneuron-like cells that exhibited typical morphology with large cell bodies, expressed specific molecules, and extended axons to form functional connections with the target muscle. In contrast, transplanted NPCs failed to yield motoneurons in the injured ventral horn of the spinal cord. The results of the study demonstrate that NPCs have the potential to generate functional motoneurons in an appropriate environment. The distinct differentiating fate of NPCs in the musculocutaneous nerve and the injured ventral horn suggests the importance and necessity of modifying the host microenvironment in use of NPCs for cell replacement therapies for motoneuron diseases.