The tobacco hornworm Manduca sexta exhibits dramatic changes in its body morphology and behavior as it is transformed from a larva into an adult during metamorphosis. Accompanying these changes is an extensive reorganization of this moth's central nervous system (CNS), which involves both the death and remodeling of subsets of larval neurons. We report here that the segmental ganglia of the larvae also contain a stereotyped array of identifiable neuronal stem cells (neuroblasts) that contribute over 2,000 cells to each thoracic ganglion and about 40-80 cells to each abdominal ganglion. The distribution of these neuroblasts varies in a segment specific manner. Dormant neuroblasts are found adjacent to the neuropil in late embryos and early first instar larvae. After the molt to the second instar, these cells enlarge and begin to divide. Through a series of asymmetrical divisions, each neuroblast generates a discrete nest of 10-90 progeny by the end of larval life. These progeny (the imaginal nest cells) are developmentally arrested at an early stage of differentiation and remain so until metamorphosis. At the onset of metamorphosis, a wave of cell death sweeps through the nests, the extent of the death being much greater within the abdominal nests than in the thoracic nests. The surviving imaginal nest cells then differentiate to become functional neurons that are incorporated into the adult CNS.