Trauma to the central and peripheral nervous systems often lead to serious morbidity. Current surgical methods for repairing or replacing such damage have limitations. Tissue engineering offers a potential alternative. Here we show that functionalized α-helical-peptide hydrogels can be used to induce attachment, migration, proliferation and differentiation of murine embryonic neural stem cells (NSCs). Specifically, compared with undecorated gels, those functionalized with Arg-Gly-Asp-Ser (RGDS) peptides increase the proliferative activity of NSCs; promote their directional migration; induce differentiation, with increased expression of microtubule-associated protein-2, and a low expression of glial fibrillary acidic protein; and lead to the formation of larger neurospheres. Electrophysiological measurements from NSCs grown in RGDS-decorated gels indicate developmental progress toward mature neuron-like behavior. Our data indicate that these functional peptide hydrogels may go some way toward overcoming the limitations of current approaches to nerve-tissue repair.