In order to identify an alternative source of human limbal stem cells, we have investigated the differentiation potential of human embryonic stem cells towards limbal stem cells and corneal epithelial cell lineage. By replicating the niche for adult human limbal stem cells, we have successfully differentiated human embryonic stem cells towards the corneal epithelial lineage. Collagen IV in the basement membrane and medium conditioned by limbal fibroblasts was used in the differentiation protocol. Our results show that, although within a three week period human embryonic stem cells can be differentiated towards limbal stem cells and the corneal epithelial lineage, the differentiation process seems incomplete. We have therefore termed the resulting cells “corneal epithelial like cells”. As a by-product of this culture system, cells expressing differentiated skin epithelial cell markers were also identified. Because two different human embryonic stem cell lines were used in these studies, we have also discovered that the two different cell lines have a different capacity to differentiate towards the corneal epithelial lineage.