Restrictions in neuronal fate occur during the transition from a multipotential to a postmitotic cell. This and later steps in neuronal differentiation are determined by extracellular signals. We report that basic fibroblast growth factor is mitogenic for stem cells and is a differentiation factor for calbindin-expressing hippocampal neurons. The neurotrophin NT-3 is a differentiation factor for the same neurons but does not affect proliferation. NT-3 and brain-derived neurotrophic factor promote the maturation of neurons derived from stem cells that have been grown in vitro. These results define functions for basic fibroblast growth factor and neurotrophins in the differentiation processes that direct a multipotential stem cell to a specific neuronal fate.