We develop CellSIUS (Cell Subtype Identification from Upregulated gene Sets) to fill a methodology gap for rare cell population identification for scRNA-seq data. CellSIUS outperforms existing algorithms for specificity and selectivity for rare cell types and their transcriptomic signature identification in synthetic and complex biological data. Characterization of a human pluripotent cell differentiation protocol recapitulating deep-layer corticogenesis using CellSIUS reveals unrecognized complexity in human stem cell-derived cellular populations. CellSIUS enables identification of novel rare cell populations and their signature genes providing the means to study those populations in vitro in light of their role in health and disease. Keywords: Benchmarking; Choroid plexus; Clustering; Cortical development; Data analysis; Human pluripotent stem cells; Lineage mapping; Rare cell types; Single-cell RNA sequencing; Software.