The subventricular zone of the postnatal forebrain produces mainly glia, although it supports limited neurogenesis. To determine whether the subventricular zone is positionally specified, the phenotype and destination of the progeny of subventricular zone cells along the anterior-posterior axis of the lateral ventricles were analyzed. A retroviral lineage tracer containing the E. coli reporter gene lacZ was injected into different parts of the subventricular zone of neonatal rat pups, and at various times thereafter, the expression of beta-galactosidase was detected histochemically or immunohistochemically in the descendants of infected cells. A discrete region of the anterior part of the subventricular zone (SVZa) generated an immense number of neurons that differentiated into granule cells and periglomerular cells of the olfactory bulb-the two major types of interneurons. Thus, the SVZa appears to constitute a specialized source of neuronal progenitor cells. To reach the olfactory bulb, neurons arising in the SVZa migrate several millimeters along a highly restricted route. Guidance cues must be involved to prohibit widespread dispersion of these migrating neurons.