In the vertebrate central nervous system, the retina has been a useful model for studies of cell fate determination. Recent results from studies conducted in vitro and in vivo suggest a model of retinal development in which both the progenitor cells and the environment change over time. The model is based upon the notion that the mitotic cells within the retina change in their response properties, or "competence", during development. These changes presage the ordered appearance of distinct cell types during development and appear to be necessary for the production of the distinct cell types. As the response properties of the cells change, so too do the environmental signals that the cells encounter. Together, intrinsic properties and extrinsic cues direct the choice of cell fate.