The caudal neural plate is a distinct region of the embryo that gives rise to major progenitor lineages of the developing central and peripheral nervous system, including neural crest and floor plate cells. We show that dual inhibition of the glycogen synthase kinase 3β and activin/nodal pathways by small molecules differentiate human pluripotent stem cells (hPSCs) directly into a preneuroepithelial progenitor population we named "caudal neural progenitors" (CNPs). CNPs coexpress caudal neural plate and mesoderm markers, and, share high similarities to embryonic caudal neural plate cells in their lineage differentiation potential. Exposure of CNPs to BMP2/4, sonic hedgehog, or FGF2 signaling efficiently directs their fate to neural crest/roof plate cells, floor plate cells, and caudally specified neuroepithelial cells, respectively. Neural crest derived from CNPs differentiated to neural crest derivatives and demonstrated extensive migratory properties in vivo. Importantly, we also determined the key extrinsic factors specifying CNPs from human embryonic stem cell include FGF8, canonical WNT, and IGF1. Our studies are the first to identify a multipotent neural progenitor derived from hPSCs, that is the precursor for major neural lineages of the embryonic caudal neural tube.