Precursors from the neuroepithelium of the developing cortex and the adult subventricular zone can be cloned in vitro after stimulation with fibroblast growth factor 2 (FGF-2), and they have the potential to give rise to both neurons and glia. The generation of neurons from these clones can be stimulated by either a factor derived from an astrocyte precursor line, Ast-1, or FGF-1. We have shown that neuronal differentiation stimulated by FGF-1 can be inhibited by diacylglycerol lipase inhibitor and mimicked by arachidonic acid, suggesting that the neuronal differentiation is signalled through the phospholipase C gamma pathway. The sequential expression of FGF-2, followed by FGF within the developing forebrain neuroepithelium, fits with the different functions that the two FGFs play in precursor regulation. We have shown that the precursor response to FGF-1 is regulated by a heparan sulphate proteoglycan expressed within the developing neuroepithelium. Precursors restricted to the astrocyte cell lineage can be stimulated by epidermal growth factor or FGF-2; however, the differentiation into glial fibrillary acidic protein-positive astrocytes appears to require a cytokine acting through the leukaemia inhibitory factor-beta receptor.