Neocortical neurons begin to differentiate soon after they are generated by mitoses at the surface of the ventricular zone (VZ). We provide evidence here that bone morphogenetic protein (BMP) triggers neuronal differentiation of neocortical precursors within the VZ. In cultures of dissociated neocortical neuroepithelial cells, BMPs increase the number of MAP-2- and TUJ1-positive cells within 24 hr of treatment. In explant cultures, BMP-4 treatment leads to an increase in the number of TUJ1-positive cells within the ventricular zone. Furthermore, truncated, dominant-negative, BMP type I receptor, introduced into neocortical precursors by retrovirus-mediated gene transfer, blocks neurite elaboration and migration out of the VZ. Finally, immunocytochemistry indicates that BMP protein is present at the VZ surface. Together, these results indicate that BMP protein is present within the VZ, that BMP is capable of promoting neuronal differentiation, and that signaling through BMP receptors triggers neuronal precursors to differentiate and migrate out of the VZ.