The mitogenic actions of epidermal growth factor (EGF) were examined in low-density, dissociated cultures of embryonic day 14 mouse striatal primordia, under serum-free defined conditions. EGF induced the proliferation of single progenitor cells that began to divide between 5 and 7 d in vitro, and after 13 d in vitro had formed a cluster of undifferentiated cells that expressed nestin, an intermediate filament present in neuroepithelial stem cells. In the continued presence of EGF, cells migrated from the proliferating core and differentiated into neurons and astrocytes. The actions of EGF were mimicked by the homolog transforming growth factor alpha (TGF alpha), but not by NGF, basic fibroblast growth factor, platelet-derived growth factor, or TGF beta. In EGF-generated cultures, cells with neuronal morphology contained immunoreactivity for GABA, substance P, and methionine-enkephalin, three neurotransmitters of the adult striatum. Amplification of embryonic day 14 striatal mRNA by using reverse transcription/PCR revealed mRNAs for EGF, TGF alpha, and the EGF receptor. These findings suggest that EGF and/or TGF alpha may act on a multipotent progenitor cell in the striatum to generate both neurons and astrocytes.