It is hoped the discovery at Edinburgh University will help drive forward the bid to use stem cells to repair damaged tissue and reverse incurable conditions.
Dr Sally Lowell, a research fellow based in the Medical Research Council Centre for Regenerative Medicine where the work was carried out, said while experts can already manipulate stem cells to grow other cell types there were often problems with the results.
She said: "By understanding how stem cells take the first step in the right direction we hope we can push them more uniformly in the direction we want them to go."
The Edinburgh University team has spent more than three years trying to find out how the cells begin transforming themselves and has identified a protein which kick-starts the process.
Now they have found the protein, researchers can watch how it affects stem cells in real time to gain a better understanding of how it works.
Producing more stem cells of the desired type is helpful for testing drugs as well as creating new therapies for degenerative conditions such as Parkinson's disease, motor neurone disease, multiple sclerosis and liver disease.