Stem cells isolated from the ventricular zone of embryonic day 12.5 rat telencephalon progressively proliferate and differentiate in vitro into three major classes of amino acid-containing neurons, glutamate, aspartate, and GABA. We quantitatively examined the effect of basic fibroblast growth factor (bFGF) and nerve growth factor (NGF) on amino acid-containing neurons. bFGF caused a threefold increase in glutamate-containing neurons, while the number of GABA- and aspartate-containing neurons was not significantly changed. In contrast, NGF did not alter the number of amino acid-containing neurons. The ratio of glutamate- to GABA-containing neurons in untreated or NGF-treated cultures was 0.6:1. In the bFGF-treated cultures, this ratio was 1.4:1, which closely approximates the ratio in the cerebral cortex in vivo. Treatment with antisense oligonucleotides targeted to bFGF mRNA provoked a 50% decrease in the number of glutamate-containing neurons but had no significant effect on the GABA-containing neurons. Thus, diffusible factors such as bFGF may play an important role in determining the relative proportion of excitatory versus inhibitory neurons in the cerebral cortex by selectively regulating the proliferation of stem cells committed to different neurotransmitter phenotypes.