Here, we present a protocol for the small-molecule-driven derivation of dopaminergic and GABAergic neurons from neural progenitor cells (NPCs) differentiated from human induced pluripotent stem cells and for stereotactic xenotransplantation of NPCs into the mouse forebrain. We also describe steps for perfusion of xenografted mice and microdissection of grafts for single-nucleus RNA sequencing analysis. This protocol can be used for various assays, including drug screening and toxicity assays, or for mechanistic studies on human neurons. For complete details on the use and execution of this protocol, please refer to Reinhardt et al. ¹ and Al-Dalahmah et al. ²