Induced pluripotent stem cells (iPSCs) exhibit reduced efficiency and higher variability in neural differentiation compared to embryonic stem cells (ESCs). In this study, we showed that mouse iPSCs failed to efficiently give rise to neuronal cells using conventional methods previously established for driving mouse ESC differentiation. We reported a novel approach which remarkably increases neural differentiation of mouse iPSCs. This novel approach initiated embryoid body (EB) formation directly from the whole cell clones isolated from the top of feeder cells. Compared to conventional neural induction methods such as single cell suspension or monolayer culture, the cell clone-derived EB method led to a pronounced increase in directed generation of various types of neural cells including neural stem cells, motoneurons and dopaminergic neurons in response to different inducers. Through gene expression microarray analysis, we identified 14 genes that were highly expressed in the cell clone-derived EBs. Among them, we found that Cdh2, also known as N-cadherin, played important roles in controlling the neural differentiation efficiency of mouse iPSCs. Forced expression of Cdh2 in iPSCs substantially enhanced the differentiation efficiency while knocking-down of Cdh2 by shRNA blocked the neural differentiation. Our results revealed a critical role of Cdh2 in the process of efficient neural differentiation of mouse iPS cells. © 2012.