Polychlorinated biphenyls (PCBs) are ubiquitous environmental chemicals that accumulate in adipose tissues over the food chain. Epidemiologic studies have indicated that PCBs influence brain development. Children who are exposed to PCBs during development suffer from neuropsychologic deficits such as a lower full-scale IQ (intelligence quotient), reduced visual recognition memory, and attention and motor deficits. The mechanisms leading to these effects are not fully understood. It has been speculated that PCBs may affect brain development by interfering with thyroid hormone (TH) signaling. Because most of the data are from animal studies, we established a model using primary normal human neural progenitor (NHNP) cells to determine if PCBs interfere with TH-dependent neural differentiation. NHNP cells differentiate into neurons, astrocytes, and oligodendrocytes in culture, and they express a variety of drug metabolism enzymes and nuclear receptors. Like triiodothyronine (T3), treatment with the mono-ortho-substituted PCB-118 (2,3′,4,4′,5-pentachlorobiphenyl; 0.01–1 μM) leads to a dose-dependent increase of oligodendrocyte formation. This effect was congener specific, because the coplanar PCB-126 (3,3′,4,4′,5-pentachlorobiphenyl) had no effect. Similar to the T3 response, the PCB-mediated effect on oligodendrocyte formation was blocked by retinoic acid and the thyroid hormone receptor antagonist NH-3. These results suggest that PCB-118 mimics T3 action via the TH pathway.