1. Isolated blastomeres and pairs of blastomeres from 8-cell embryos of Halocynthia roretzi and Halocynthia aurantium were cleavage-arrested with cytochalasin B and cultured. Their differentiation was examined in terms of membrane excitability, immunoreactivity to an epidermis-specific monoclonal antibody (2C5), and the presence of acetylcholinesterase. 2. The blastomeres that showed epidermal-type differentiation had Ca2(+)-dependent action potentials and membrane currents, and immunoreactivity to 2C5. The blastomeres that showed neural-type differentiation had Na(+)-, Ca2(+)- and TEA-sensitive delayed K+ channels, and lacked immunoreactivity to 2C5. 3. Cleavage-arrested anterior-animal blastomeres, a4-2, when cultured in isolation from an 8-cell embryo, differentiated exclusively into epidermal-type cells. However, when cultured in contact with anterior-vegetal blastomeres, A4-1, they mostly showed neural-type differentiation (seventeen out of twenty-four cells in H. roretzi). 4. Reduction of the cytochalasin B concentration enhanced neural-type development of a4-2 blastomeres in contact with A4-1 blastomeres in H. aurantium, possibly by tightening the physical contact between the blastomeres. 5. When a cleavage-arrested and isolated a4-2 blastomere was treated with 2% pronase at 10 degrees C for 15 min at the time when sister control embryos reached the 32-cell stage, the blastomere underwent neural-type differentiation in a manner identical to that of a4-2 blastomeres contacted by A4-1 cells. 6. The period during which neural-type differentiation of a4-2 blastomeres could be induced by treatment with pronase was from the 8-cell to the 110-cell stage. At the late gastrula stage neural-type differentiation of a4-2 blastomeres was not induced by pronase. The effective period for neural-type differentiation of a4-2 blastomeres in contact with A4-1 cells was between the 64-cell stage and late gastrula stage. Competence of the a4-2 blastomere to undergo neural-type differentiation decreased during gastrula stages, while the inducing ability of the A4-1 blastomere lasted longer. 7. In a few cases the posterior-animal blastomere, b4-2, could also be induced to undergo neural-type differentiation after contact with A4-1 cells or after pronase treatment. 8. The appearance of Na+ spikes in a4-2 blastomeres in contact with A4-1 cells was considered a manifestation of neural induction, similar in principle to the induction of ectoderm by the chorda-mesoderm in higher vertebrates.