Enhanced methods for the generation of medial ganglionic eminence (MGE) cells from pluripotent stem cells are provided that involve an additional step of contacting the cells with an activator of FGF8 signaling while differentiating Pax6+ cells progenitor cells into MGE cells with an activator of sonic hedgehog, and optionally a Wnt inhibitor. The activator of FGF8 signaling shifts the differentiation of the population of cells to NKX2.1+ MGE cells, rather than to CopuTFII+ caudal ganglionic eminence (CGE) cells. Methods for treatment of neurological disorders, such as epilepsy, by transplant of MGE cells, or GABAergic interneurons derived from human pluripotent stem cells, into a subject in need of treatment are also provided. Human pluripotent stem cell derived MGE cells when transplanted successfully suppress spontaneous seizures, e.g. in epilepsy. We also have developed a method to purify MGE cells and maturing interneurons from differentiated pluripotent stem cells using cell surface marker and molecular beacon technology.