NERVE growth factor plays an important part in neuron–target interactions in the late embryonic and adult brain. We now report that this growth factor controls the proliferation of neuronal precursors in a defined culture system of cells derived from the early embryonic brain. Neuronal precursor cells were identified by expression of the intermediate filament protein nestin. These cells proliferate in response to nerve growth factor but only after they have been exposed to basic fibroblast growth factor. On withdrawal of nerve growth factor, the proliferative cells differentiate into neurons. Thus, in combination with other growth factors, nerve growth factor regulates the proliferation and terminal differentiation of neuroepithelial stem cells.