Reprogramming of somatic cells into induced pluripotent stem cells (iPSCs) by retroviral overexpression of the transcription factors Oct4, Sox2, Klf4, and c-Myc holds great promise for the development of personalized cell replacement therapies. In an attempt to minimize the risk for chromosomal disruption and to simplify reprogramming, several studies demonstrated that a reduced set of reprogramming factors is sufficient to generate iPSC, albeit at lower efficiency. To elucidate the influence of factor reduction on subsequent differentiation, we compared the efficiency of neuronal differentiation in iPSC generated from postnatal murine neural stem cells with either one (Oct4; iPSC _1F-NSC), two (Oct4, Klf4; iPSC _2F-NSC), or all four factors (iPSC _4F-NSC) with those of embryonic stem cells (ESCs) and iPSC produced from fibroblasts with all four factors (iPSC _4F-MEF). After 2 weeks of coculture with PA6 stromal cells, neuronal differentiation of iPSC _1F-NSC and iPSC _2F-NSC was less efficient compared with iPSC _4F-NSCand ESC, yielding lower proportions of colonies that stained positive for early and late neuronal markers. Electrophysiological analyses after 4 weeks of differentiation identified functional maturity in neurons differentiated from ESC, iPSC _2F-NSC, iPSC _4F-NSC, and iPSC _4F-MEF but not in those from iPSC _1F-NSC. Similar results were obtained after hematoendothelial differentiation on OP9 bone marrow stromal cells, where factor-reduced iPSC generated lower proportions of colonies with hematoendothelial progenitors than colonies of ESC, iPSC _4F-NSC, and iPSC _4F-MEF. We conclude that a reduction of reprogramming factors does not only reduce reprogramming efficiency but may also worsen subsequent differentiation and hinder future application of iPSC in cell replacement therapies.