It has been demonstrated that multipotent neuronal progenitor cells can be isolated from the developing or adult CNS and proliferated in vitro in response to epidermal growth factor. The present study was undertaken to investigate the differentiation of neuronal progenitor cells after transplantation into the neonatal rat forebrain striatum. Primary cultured progenitor cells were labeled with 3,3'-dioctadecycloxacarbonyl- amine perchlorate (DiO). DiO labeled progenitor cells were implanted into neonatal rat striatum. Implanted DiO labeled progenitor cells were differentiated into astrocytes and GABAergic neurons. These results suggest that implanted progenitor cells can be differentiated into neurons in host forebrain striatum. In addition, our data show that DiO labeling is a useful technique for tracing implanted progenitor cells.