Recent successes in deriving human-induced pluripotent stem cells (hiPSCs) allow for the possibility of studying human neurons derived from patients with neurological diseases. Concomitant inhibition of the BMP and TGF-β1 branches of the TGF-β signaling pathways by the endogenous antagonist, Noggin, and the small molecule SB431542, respectively, induces efficient neuralization of hiPSCs, a method known as dual-SMAD inhibition. The use of small molecule inhibitors instead of their endogenous counterparts has several advantages including lower cost, consistent activity, and the maintenance of xeno-free culture conditions. We tested the efficacy of DMH1, a highly selective small molecule BMP-inhibitor for its potential to replace Noggin in the neuralization of hiPSCs. We compare Noggin and DMH1-induced neuralization of hiPSCs by measuring protein and mRNA levels of pluripotency and neural precursor markers over a period of seven days. The regulation of five of the six markers assessed was indistinguishable in the presence of concentrations of Noggin or DMH1 that have been shown to effectively inhibit BMP signaling in other systems. We observed that by varying the DMH1 or Noggin concentration, we could selectively modulate the number of SOX1 expressing cells, whereas PAX6, another neural precursor marker, remained the same. The level and timing of SOX1 expression have been shown to affect neural induction as well as neural lineage. Our observations, therefore, suggest that BMP-inhibitor concentrations need to be carefully monitored to ensure appropriate expression levels of all transcription factors necessary for the induction of a particular neuronal lineage. We further demonstrate that DMH1-induced neural progenitors can be differentiated into β3-tubulin expressing neurons, a subset of which also express tyrosine hydroxylase. Thus, the combined use of DMH1, a highly specific BMP-pathway inhibitor, and SB431542, a TGF-β1-pathway specific inhibitor, provides us with the tools to independently regulate these two pathways through the exclusive use of small molecule inhibitors.