Previous studies suggest that a population of precursor cells from the developing and adult mouse striatum can be expanded in culture using serum-free, N2-supplemented medium and mitogenic factors such as epidermal growth factor (EGF). Here we show that EGF-responsive precursor cells from embryonic rat striatum and mesencephalon can also be expanded in culture, incorporate bromodeoxy uridine (BrDU) and develop into spheres that either adhere to the surface of the culture dish or float freely in the medium. Addition of B27, a medium supplement that increases neuronal survival in primary CNS cultures, resulted in a tenfold increase in the number of proliferating cells in vitro over the first week. The effects of B27-supplemented medium on precursor cell survival were only seen when primary cultures were used, such that dividing cells grown in B27 for 1 week could then be transferred to either B27 or N2 medium and show similar survival and division rates in response to EGF. After 1, 2 or 4 weeks of growth in B27-supplemented medium, dissociated precursor cells from either striatal or mesencephalic cultures could be differentiated when exposed to a poly-1-lysine-coated substrate in serum and EGF-free medium supplemented with B27. These cells then matured into a mixed culture containing neurons (approximately 35% of cells), astrocytes (approximately 44% of cells), and oligodendrocytes (approximately 10% of cells), based on immunocytochemical staining with microtuble-associated protein (MAP2), glial fibriallary acidic protein and galactocerebrosidase. When whole spheres of precursor cells were allowed to differentiate, every one examined was found to generate neurons, astrocytes and oligodendrocytes in similar proportions. Our findings suggest that B27-supplemented medium provides an enhanced environment for dividing and differentiating multi-potential precursor cells over the first week in vitro. This culture system gives an expandable source of well-characterised, multipotential CNS precursors that can be labelled with BrdU and, as such, may prove useful for either differentiation experiments in vitro or as a source of tissue for grafting into the damaged CNS.