The midline of the insect CNS provides a good system for studying the control of neuronal and glial cell fates, because it contains a small number of distinct cell types that arise from a unique set of precursors. In this report we analyze the development of the CNS midline in the grasshopper embryo, focusing on the median neuroblast (MNB) cluster, which contains the majority of midline neurons. We have directly traced cell lineage in the MNB cluster by injecting the MNB with tracer dyes and following the development of its progeny in whole embryo cultures. As least three types of neuronal progeny are labeled with tracer dye in these experiments. In addition, we find that all of the midline glia are also derived from the MNB. Thus, this neuroblast is actually a multipotent progenitor cell. We also examined the temporal and spatial patterns of midline development by staining embryos with antibodies to neuronal and glial markers and to the protein product of the engrailed gene, which is transiently expressed by all MNB progeny. Our data show that neuronal and glial progeny are generated from the MNB in distinct temporal phases. A change in the orientation of the MNB's mitotic spindle correlates with the transition between two of the phases of progeny production.