Oligodendrocyte-type-2 astrocyte (O-2A) progenitor cells give rise to oligodendrocytes and type-2 astrocytes in cultures of rat optic nerve. These progenitors are one of the few cell types in which most aspects of proliferation and differentiation can be manipulated in a defined in vitro environment. When exposed to platelet-derived growth factor (PDGF), O-2A progenitors divide a limited number of times before clonally related cells differentiate into oligodendrocytes with a timing similar to that seen in vivo. In contrast, O-2A progenitors grown in the absence of mitogen do not divide but differentiate prematurely into oligodendrocytes, and progenitors exposed to appropriate inducing factors differentiate into type-2 astrocytes. O-2A progenitors can become immortalized through at least two different mechanisms. First, when O-2A progenitors are exposed to a combination of PDGF and basic fibroblast growth factor (bFGF) these cells undergo continuous self-renewal in the absence of differentiation. In contrast, the application of bFGF alone is associated with premature oligodendrocytic differentiation of dividing O-2A lineage cells. Thus, cooperation between growth factors can modulate O-2A progenitor self-renewal in a defined chemical environment by eliciting a novel programme of division and differentiation which cannot be predicted from the effects of either factor examined in isolation. A further mechanism which allows prolonged self-renewal in the O-2A lineage is the generation of a stem cell. O-2A progenitors isolated from optic nerves of perinatal rats also have the capacity to give rise to a population of cells called O-2Aadult progenitors, which differ from their perinatal counterparts in many characteristics. Most importantly, O-2Aadult progenitors have a slow cell cycle, divide and differentiate asymmetrically and appear to have the capacity for prolonged self-renewal. Thus, immortalization in this lineage can also be achieved by the generation of a cell with stem cell-like characteristics from a rapidly dividing progenitor population.