Growth factors and cytokines play an important role in the development of central nervous systems including neurons of the retina. However, the molecular pathways that trigger cell growth remain unclear in neuronal precursors. In the present studies, we used a retinal explant culture system to investigate the response of signal transducer and activator of transcription factors (STATs) to extrinsic factors during mouse retinal development. Retinas from embryonic and neonatal stages showed that STAT3 but not STAT1 was activated in response to ciliary neurotrophic factor (CNTF), leukemia inhibitory factor (LIF), fibroblast growth factor-1 (FGF1), fibroblast growth factor-2 (FGF2), epidermal growth factor (EGF), interferon-alpha (IFN-alpha) and interferon-gamma (IFN-gamma) in distinct patterns. STAT3 activation was detected in the outermost retina layer in response to CNTF, LIF, FGF1, and IFN-alpha 24 hr after stimulation in postnatal day 1 (PN1) explants, but not FGF2, EGF, IFN-gamma, and retinoic acid (RA). Cytokine stimulation increased the number of cells incorporating BrdU and the labelled cells co-localized with phosphorylated STAT3, indicating that STAT3 may play an essential role in coupling extrinsic factors to retina precursor cell (RPC) proliferation. Furthermore, persistent expression of two neural precursor markers, Hes1 and Otx2 was detected in outer retinal layers and correlated with STAT3 activation by CNTF, suggesting that STAT3 activation may play a critical role in stimulating mitotic precursors. These results strongly support a model that STAT3-mediated signalling regulates precursor populations during mouse retina development.