Stem cells use signals to begin the process of differentiation, whereby they mature from an unspecialized cell into a specialized cell that has distinct functions and form. These signals originate either from within the cell or from the external environment where the cell lives.
The chemical secretions of neighboring cells, the molecules within the area around the cell, and even physical contact with other cells are external signals that cause differentiation to begin. Internal signals are controlled by expression of the cell's genes. All of these signals together work to mature the cell into the specific cell type it will become.