The mature nervous system is made up of a large number of terminally differentiated neuronal and glial cell types, which develop from precursor cells in the embryonic nervous system. Many aspects of the differentiation pathways leading to the formation of neurons and glia remain elusive because of the cellular and molecular complexity of the brain, with cells of different types intermingled and differentiating at different times. One way to reduce the complexity is to study particular developmental stages and steps in neuronal differentiation in cell lines, i.e. clonal, homogeneous populations of cells that can be grown indefinitely in vitro. Urban Lendahl and Ronald McKay discuss how cell lines are used to dissect the cellular differentiation of the nervous system. Recent technical progress may allow the construction of 'custom-made' cell lines from different regions and developmental stages in the nervous system. Such cell lines retain features of the cells from which they originated and make possible detailed molecular studies of features only transiently present in the developing brain. New strategies are being developed which can be used to assess the effect of genetic changes in cell lines both in tissue culture and in the whole animal. This review attempts to show that cell lines are not a 'reductio ad absurdum' but an additional and critical tool in understanding the genetic contribution to the organization and function of the brain.