Advancement in our understanding of the biology of adult stem cells and their therapeutic potential relies heavily on meaningful functional assays that can identify and measure stem cell activity in vivo and in vitro. In the mammalian nervous system, neural stem cells (NSCs) are often studied using a culture system referred to as the neurosphere assay. We previously challenged a central tenet of this assay, that all neurospheres are derived from a NSC, and provided evidence that it overestimates NSC frequency, rendering it inappropriate for quantitation of NSC frequency in relation to NSC regulation. Here we report the development and validation of the neural colony-forming cell assay (NCFCA), which discriminates stem from progenitor cells on the basis of their proliferative potential. We anticipate that the NCFCA will provide additional clarity in discerning the regulation of NSCs, thereby facilitating further advances in the promising application of NSCs for therapeutic use.