Although maternal intake of folic acid (FA) prevents neural tube defects in 70% of the population, the exact mechanism of prevention has not been elucidated. We hypothesized that FA affects neural stem cell (NSC) proliferation and differentiation. This hypothesis was examined in a folate-responsive spina bifida mouse model, Splotch (Sp(-/-)), which has a homozygous loss-of-function mutation in the Pax3 gene. Neurospheres were generated with NSCs from the lower lumbar neural tube of E10.5 wild-type (WT) and Sp(-/-) embryos, in the presence and absence of FA. In the absence of FA, the number of neurospheres generated from Sp(-/-) embryos compared with WT was minimal (P<0.05). Addition of FA to Sp(-/-) cultures increased the expression of a Pax3 downstream target, fgfr4, and rescued NSC proliferative potential, as demonstrated by a significant increase in neurosphere formation (P<0.01). To ascertain if FA affected cell differentiation, FA-stimulated Sp(-/-) neurospheres were allowed to differentiate in the continued presence or absence of FA. Neurospheres from both conditions expressed multi-potent stem cell characteristics and the same differentiation potential as WT. Further, multiple neurospheres from both WT and FA-stimulated Sp(-/-) cell cultures formed extensive synaptic connections. On the whole, FA-mediated rescue of neural tube defects in Sp(-/-) embryos promotes NSC proliferation at an early embryonic stage. FA-stimulated Sp(-/-) neurospheres differentiate and form synaptic connections, comparable to WT.