ES cells have been reported to serve as an excellent source for obtaining various specialized cell types and could be used in cell replacement therapy. Here, we demonstrate the potential of ES cells to differentiate along retinal ganglion cell (RGC) lineage. FGF2-induced ES cell derived neural progenitors (ES-NPs) were able to generate RGC-like cells in vitro upon differentiation. These cells expressed RGC regulators and markers such as, Ath5, Brn3b, RPF-1, Thy-1 and Islet-1, confirming their potential to differentiate into RGCs. The generation of RGCs from ES-NPs was enhanced with the exposure of FGF2 and Sonic hedgehog (Shh), although Shh treatment alone did not affect RGC differentiation significantly. ES-NPs, after exposure to FGF2, were capable of integrating and differentiating into RGCs in vivo upon transplantation. Thus, our study suggests that ES cells can serve an excellent renewable source for generating RGCs that can be used to treat neurodegenerative diseases like glaucoma.