The signaling interactions that control oligodendrocyte generation from their precursor cells have been studied intensively. Much less is known about how astrocyte generation is normally controlled. Here we report the purification and characterization of astrocyte precursor cells (APCs) from the developing rat optic nerve. APCs are antigenically distinct from astrocytes. Both cell types are Pax2(+) and vimentin+, whereas astrocytes are GFAP+ and S100beta+, and the precursor cells are A2B5(+). In contrast to purified astrocytes, purified APCs rapidly die in serum-free culture but can be saved by basic fibroblast growth factor (bFGF) and glial growth factor 2 (GGF2). Unlike oligodendrocyte precursor cells, APCs do not differentiate by default; their differentiation into GFAP+ cells is induced by ciliary neurotrophic factor (CNTF) or by leukemia inhibitory factor (LIF). Finally, the survival, proliferation, and differentiation of APCs were promoted by coculture with other embryonic optic nerve cell types but not with purified embryonic retinal ganglion cells, indicating that interactions with non-neuronal cells are likely to play an important role in controlling astrocyte generation in the developing optic nerve.