Differentiation of microglial cells is characterized by transformation from ameboid into ramified cell shape and up-regulation of K+ channels. The processes of microglial differentiation are controlled by astrocytic factors. The mechanisms by which astrocytes cause developmental changes in morphological and electrophysiological properties of microglia have remained unclear. We show here that the cytokines transforming growth factor-beta (TGF-beta), macrophage colony-stimulating factor (M-CSF) and granulocyte/macrophage colony-stimulating factor (GM-CSF) are released by astrocytes at concentrations sufficient to induce ramification and up-regulation of delayed rectifier (DR) K+ channels in microglia. Transformation from ameboid into ramified morphology induced in microglia by exposure to astrocyte-conditioned medium (ACM) was inhibited by neutralizing antibodies against TGF-beta, M-CSF or GM-CSF, whilst ACM-induced DR channel expression was exclusively inhibited by antibodies against TGF-beta. Although both ramification and DR channel up-regulation occurred simultaneously, DR channel blockade by charybdotoxin failed to inhibit microglial ramification. The ACM-induced ramification of microglia was inhibited by the tyrosine kinase inhibitor genistein, whereas DR channel up-regulation did not occur in the presence of the serine/threonine kinase inhibitor H7. Our data suggest that astrocytes modulate processes of microglial differentiation in parallel but via distinct signalling pathways.