Mucopolysaccharidosis type VII (MPS VII) results from deficiencies in the gene encoding the lysosomal enzyme beta-glucuronidase (GUSB). To study how the genetic and biochemical defects of MPS disease affect neural cell populations, neural progenitor cells (NPCs) were isolated from MPS VII mice and normal littermates. After growth in culture, approximately 90% of cells from both genotypes were nestin positive, a marker for NPCs, and lacked markers associated with lineage commitment. The mutant NPCs contained elevated levels of undegraded glycosaminoglycans (GAGs), the substrate for GUSB. Transduction with a retrovirus-vector expressing normal GUSB resulted in correction of the biochemical defects. Because of the demonstrated roles that GAGs and proteoglycans have in NPC biology and neural development, we tested whether the alterations in GAG metabolism affected MPS VII NPC properties regulated by GAG-containing molecules. MPS VII NPC cultures had growth rates in response to FGF-2 that were similar to normal cultures and the efficiency of differentiation into neurons was the same as with normal cells. Thus, even though isolated NPCs accumulate abnormally high levels of GAGs, these two key developmental properties were not altered when the cells were examined outside the milieu of the diseased brain.