Cell differentiation is the process by which progenitor cells from an undifferentiated state (stem/progenitors) become structurally and functionally specialized in distinct cell types (e.g in the nervous system: different types of neurons and glial cells).

The structural and functional specificity of a cell depends on the proteins it synthesizes. With rare exceptions, all cells of a given organism contain the same genetic information (genomic equivalence).

Cell differentiation implies a specific pattern of gene expression in which a particular set of genes are turned on (expressed) or turned off (repressed) resulting in the establishment of specific cellular morphologies and functions. 

Cell differentiation usually occurs in response to external signals (according to the environment in which the cell develops) and is guided and maintained through the crosstalk between transcription factors and epigenetic mechanisms.