We have used a recombinant retrovirus carrying the lacZ gene to study the developmental potential of precursor cells from the embryonic rat cerebral cortex in dissociated cell culture. Virus was used to label a small number of cultured cells genetically so that their fate could be determined. Infected clones were detected with an anti-beta-galactosidase serum, and the labeled cells were identified using monoclonal antibodies. The results revealed that most precursor cells generated a single cell type, the majority being either neurons or oligodendrocytes. However, a proportion of the neuronal clones also included oligodendrocytes. This proportion increased until embryonic day 16 when 18% of the neuronal clones were of this type. This suggests that during neurogenesis in the cerebral cortex there exists a cell with the potential to generate these two quite different neural cell types.