Directed differentiation of human embryonic stem cells (hESCs) into specific somatic cells holds great promise for cell replacement therapies. However, it is unclear if in vitro hESC differentiation causes any epigenetic abnormality such as hypermethylation of CpG islands. Using a differential methylation hybridization method, we identified 65 CpG islands (out of 4608 CpG islands or 1.4%) that exhibited increased DNA methylation during the conversion of hESCs into neural progenitor/stem cells (NPCs). These methylated CpG islands belong to genes in cell metabolism, signal transduction and cell differentiation, which are distinctively different from oncogenic CpG island hypermethylation observed in cancer-related genes during tumorigenesis. We further determined that methylation in these CpG islands, which is probably triggered by de novo DNA methyltransferase Dnmt3a, is abnormally higher in hESC-NPCs than in primary NPCs and astrocytes. Correlating with hypermethylation in promoter CpG islands of metabolic enzyme gene CPT1A and axoneme apparatus gene SPAG6, levels of CPT1A and SPAG6 mRNAs are significantly reduced in hESC-NPCs when compared with hESCs or primary neural cells. Because CPT1A is involved in lipid metabolism and CPT1A deficiency in human is associated with the hypoketotic hypoglycemia disorder, the reduced CPT1A expression in hESC-NPCs raises a potential concern for the suitability of these cells in cell transplantation. Collectively, our data show that abnormal CpG island methylation takes place in a subset of genes during the differentiation/expansion of hESC derivatives under current culture conditions, which may need to be monitored and corrected in future cell transplantation studies.