Background: In this study, we examined a new two STEP induction protocol for improving the DIFFERENTIATION of human umbilical cord blood-derived mesenchymal stem cells into neural progenitor cells.Materials and Methods: Human umbilical cord blood-derived mesenchymal stem cells were first cultured in Dulbecco’s modified eagle medium supplemented with 10% fetal bovine serum in a humidified incubator equilibration with 5% CO2 at 37oC. To stimulate neural-DIFFERENTIATION of human umbilical cord blood-derived mesenchymal stem cells, Dulbecco’s modified eagle medium was removed and replaced with pre-induction media including retinoic acid, basic fibroblast growth factor, epidermal growth factor, and basal medium for 2 days. Then, we used nerve growth factor, 3-isobutylmethyl-xanthine, ascorbic acid, and basal medium for 6 days. Real-time PCR was performed to analyze the expression of neural specific genes such as glial fibrillary acidic protein, microtubule-associated protein 2, major basic protein, and Nestin.Results: Real-time-PCR showed that the expression of glial fibrillary acidic protein, major basic protein, and microtubule-associated protein 2 genes, after two STEP induction, significantly increased compared to common induction protocol. In addition, our study showed that retinoic acid might play a main role in neural-DIFFERENTIATION and fate of mesenchymal stem cells compared to other neural inducers.Conclusion: The combination of chemicals and growth factors in a two STEP induction protocol may improve the efficiency of DIFFERENTIATION of human umbilical cord blood-derived mesenchymal stem cells into neural progenitor cells and provide a new method for easy and fast application of human umbilical cord blood-derived mesenchymal stem cells in regenerative medicine.