Progenitor cells isolated from early rat embryo retinas differentiate into phenotypes normally generated early in retinal development (e.g., ganglion cells), whereas progenitors isolated from postnatal retinas differentiate into later-generated retinal cell types (e.g., rod photoreceptors; Reh and Kljavin, J. Neurosci. 9:4179-4189; 1989; Adler and Hatlee, 1989; Science 243:391-393; Sparrow, Hicks, and Barnstable, 1990, Dev. Brain Res. 51:69-84). To determine whether this change in committment is intrinsic to the progenitor cells, or alternatively can be modified by interactions with their developing environment, I co-cultured mouse and rat retinal cells, from different developmental stages, and identified the resulting phenotypes with species-specific and cell class-specific antibodies. I found that the phenotypes into which mouse neuroepithelial cells differentiate depends on the phenotypes of the rat cells that surround them. Retinal precursor cells from embryonic day (E) 10-12 will adopt the rod photoreceptor phenotype only when close to cells expressing this phenotype. By contrast, when the E10-12 retinal progenitor cells are cultured with cells from the cerebral cortex, they differentiate primarily into large multipolar neurons, similar in their morphology and antigen expression to retinal ganglion cells. These results indicate that interactions among the cells of the developing retina are important in the determination of cell fate.