New neurons continue to be born in the subgranular zone (SGZ) of the dentate gyrus in the hippocampus of adult mammals, including humans. Previous work has shown that astrocytes function as the progenitors of these new neurons through immature intermediate D cells. In the first part of the present study, we determined the structure of each of these progenitors and how they are organized in three dimensions. Serial-section reconstructions of the SGZ, using confocal and electron microscopy demonstrate that SGZ astrocytes form baskets that hold clusters of D cells, largely insulating them from the hilus. Two types of glial fibrillary acidic protein–expressing astrocytes (radial and horizontal) and three classes of doublecortin and PSA-NCAM–positive D cells (D1, D2, D3) were observed. Radial astrocytes appear to interact closely with clusters of D cells forming radial proliferative units. In the second part of this study, we show that retrovirally labeled radial astrocytes give rise to granule neurons. We also used bromodeoxyuridine and [3H]thymidine labeling to study the sequence of appearance of the different D cells after a 7-day treatment with anti-mitotics. This analysis, together with retroviral labeling data, suggest that radial astrocytes divide to generate D1 cells, which in turn divide once to form postmitotic D2 cells. D2 cells mature through a D3 stage to form new granule neurons. These observations provide a model of how the germinal zone of the adult hippocampus is organized and suggest a sequence of cellular stages in the generation of new granule neurons. J. Comp. Neurol. 478:359–378, 2004. © 2004 Wiley-Liss, Inc.