The preB cell receptor is expressed for a short period after mu heavy chain is produced, that is, at the large preB cell stage in B cell development. The severe impairment of B cell differentiation observed in mice deficient for the preB cell receptor clearly demonstrated the importance of the preB cell receptor in B cell development. Analyses of bone marrow precursor B cells in normal and B cell-deficient mutant mice indicated the preB cell receptor transduced signals to drive cell cycle and to induce allelic exclusion. The proliferation of the preB cell receptor-expressing cells leads to the selective expansion of cells which have succeeded in the productive rearrangement of mu heavy chain gene. This process builds up a preB cell pool large enough to generate sufficient numbers of mature B cells. The preB cell receptor appears to induce allelic exclusion by shutting off the expression of recombinase activation gene (RAG). In order to analyse the signal transduction pathway downstream of the preB cell receptor, we have developed a new system in which cross-linking of Ig beta expressed on bone marrow proB cells mimics the signalling through the preB cell receptor to induce differentiation from proB to small preB cells.