We have developed an in vitro culture system to study the regulation of proliferation and differentiation of neural precursor cells contained within the neuroepithelium of embryonic day 10 mice. A number of soluble growth factors have been tested for their ability to regulate these early events and, of these factors, we have found that the fibroblast growth factors [FGFs] can directly stimulate the proliferation and survival of the neuroepithelial cells. At least 50% of the neuroepithelial cells divide in the presence of FGF whereas in the absence of FGF all of the cells die within 6 days of culture. At higher concentrations of FGF, the cells change from being nonadherent round cells in tight clusters into a more flattened cell type which adheres to the substratum. This morphological change is accompanied by the expression of both neurofilament and GFAP, which are definitive markers of the two major cell types in the central nervous system: neurons and glia. In addition a neuroepithelial cell line, which does not rely on FGF for survival or proliferation, expresses both of these markers in response to FGF. These results indicate that FGF is stimulating the differentiation of the neuroepithelial cells into mature neurons and glia.