Epigenetic reprogramming of somatic cells to pluripotency has been achieved by nuclear transfer or by fusion with embryonic stem cells (ESCs). Recently, a series of elegant studies showed that retroviral transduction of several transcription factors, e.g., Oct3/4, Sox2, c-Myc, and Klf4, can revert differentiated cells to ESC-like induced pluripotent stem (iPS) cells, paving the way for in vitro methods to generate disease- or patient-specific stem cells. To date, these iPS cells have been established from several somatic cells of mouse and human origin. Here, we report direct reprogramming of rat neural stem (NS)/precursor cells into iPS cells by introducing Oct3/4, Sox2, c-Myc, Klf4 and Nanog genes. In contrast, introduction of ESC extracts into NS cells allowed partial reprogramming, but failed to induce pluripotency. When these two methods were combined, iPS cells were generated with significantly higher efficiency. By morphological, gene expression, epigenetic status, proliferation, and differentiation criteria, these rat iPS cells exhibited ESC-like properties, including differentiation into three germ layers and into a variety of neural lineage cells in vitro and in vivo. Taken together, our results show that pluripotent iPS cells can be derived from genetically unmodified rat tissues including neural stem cells, indicating the applicability of this protocol to other species beyond mouse and human. Given the general paucity of rat ESCs, these iPS cells will be useful in the studies of rat developmental biology and numerous rat-based models of human diseases.