Replication-defective retroviruses expressing the t-neu oncogene, or a hybrid protein with the neu tyrosine kinase linked to the external region of the human epidermal growth factor receptor (egfr-neu), were used to establish lines of murine oligodendroglial precursor cells. Differentiation of the t-neu lines into myelin-associated glycoprotein (MAG)-positive oligodendrocytes was induced by dibutyryl cAMP, and the egfr-neu line showed limited differentiation in vitro upon withdrawal of epidermal growth factor. Cerebellar granule cell neurons expressed mitogens for the cell lines. Upon transplantation into demyelinated lesions, t-neu line cells engaged with the demyelinated axons whereas the egfr-neu line cells differentiated further and ensheathed the axons. These cell lines thus interact with neurons in vitro and in vivo and can be used as tools to define the molecules involved in different stages of neuron-glia interaction.