Using specific antibody markers and double-label immunofluorescence microscopy, we have followed the fate of progenitor cells in the sympathoadrenal (SA) sublineage of the neural crest in developing rat embryos. Such progenitors are first recognizable in the primordial sympathetic ganglia at embryonic day 11.5 (E11.5), when they express tyrosine hydroxylase. At this stage, the progenitors also coexpress neuronal markers such as SCG 10 and neurofilament, together with a series of chromaffin cell markers called SA 1–5 (Carnhan and Patterson, 1991 a). The observation of such doubly labeled cells is consistent with the hypothesis that these cells represent a common progenitor to sympathetic neurons and adrenal chromaffin cells. Subsequent to E 11.5, expression of the chromaffin markers is extinguished in the sympathetic ganglia but retained by cells within the adrenal gland. Concomitant with the loss of the SA 1-5 immunoreactivity in sympathetic ganglia, a later sympathetic neuron-specific marker, B2, appears. In dissociated cell suspensions, some B2+ cells that coexpress SA 1 are seen. This implies a switch in the antigenic phenotype of developing sympathetic neurons, rather than a replacement of one cell population by another. The SA 1----B2 transition does not occur for the majority of cells within the adrenal primordium. In vitro, most B2+ cells fail to differentiate into chromaffin cells in response to glucocorticoid. Instead, they continue to extend neurites and then die. Taken together, these data imply that the SA 1----B2 transition correlates with a loss of competence to respond to an inducer of chromaffin differentiation. Thus, the development of SA derivatives is controlled both by environmental signals and by changes in the ability of differentiating cells to respond to such signals.