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We have previously described the expression of specific γ-aminobutyric acid (GABA)A receptor subunits and their transcripts in the cortical neuroepithelium (Ma and Barker, 1995, 1998). However, it is not clear whether neural precursor cells exposed to basic fibroblast growth factor (bFGF) in vitro reproduce the biological properties of neuroepithelial cells in vivo within the embryonic ventricular zone. In the present study, neural precursor cells were isolated from the telencephalic neuroepithelium of embryonic day 13–13.5 rats and exposed to bFGF in serum-free medium. Basic FGF-responsive cells were capable of dividing and differentiating into neurons and astrocytes. The rapidly dividing cells formed multicellular spheres and then a rosette-like formation in which a majority of cells expressed GABAA receptor α4, β1, or γ1 subunit proteins. We found in perforated patch-clamp recordings that GABA depolarized bromodeoxyundine (BrdU)⁺ precursor cells, and under voltage-clamp induced a bicuculline-sensitive current that reversed at the Cl⁻ equilibrium potential. GABA also increased cytoplasmic Ca⁺ in a significant number of BrdU⁺ cells that was blocked by bicuculline. The bicuculline sensitivity of these pharmacological effects implicates GABAA receptor/Cl⁻ channels, since bicuculline is a competitive GABAA antagonist at these channels in well-differentiated cells. It is possible that the three GABAA receptor subunits (α4, β1, and γ1) found in precursor cells form the Cl⁻ channels detected electrophysiologically. The functional GABAA receptor/Cl⁻ channels and associated regulation of their cytoplasmic Ca⁺ levels via bicuculline-sensitive mechanisms may play significant roles in the regulation of neural cell proliferation in this model neuroepithelium. © 1998 John Wiley & Sons, Inc. J Neurobiol 35: 277–286, 1998