Cortical neurons differ in their neurochemical properties. Projection neurons use excitatory amino acids as transmitters, most local interneurons contain the inhibitory transmitter GABA, and specific subtypes of local circuit neurons express distinct neuropeptides. How this cellular diversity is generated during development is not known. We have been studying the transmitter differentiation of cortical neurons in different in vitro systems using immunohistochemical techniques. Transmitter phenotypes of cortical neurons were examined in slice cultures, i.e. in the absence of extrinsic cortical connections, and in dissociated cortical cell cultures, i.e. in the absence of extrinsic and intrinsic cortical connections. The expression of vasoactive intestinal polypeptide in cortical interneurons occurred normally in slice cultures prepared from neonatal rats between birth and 2 days of age, but was strongly impaired in dissociated cell cultures prepared at the same time. These results suggest that the intact cortical environment present in the slice cultures exerts crucial influences for neuropeptide differentiation. In contrast, the transmitters glutamate and GABA were expressed normally in the appropriate cell types and similar in proportions in dissociated cell cultures prepared from cortices at embryonic day 19. Only cells dissociated during S-phase failed to express glutamate and GABA in vitro. When cells were kept for 24 h after mitosis in a cortical slice preparation in vitro, however, they later expressed their appropriate transmitter phenotypes. Thus, signals from the local cortical environment that act early in the cell cycle are required for the specification of transmitter phenotypes of cortical neurons.