A mes-c-myc A1 (A1) cell line was generated by retroviral infection of cultured embryonic mesencephalic cells and selected by neomycin resistance. A1 cells cease to divide and undergo morphological differentiation after serum withdrawal or addition of c-AMP. Proliferating or morphologically differentiated A1 cells are all positive for vimentin and nestin, a marker of neural precursor, and show neuronal markers such as microtubule-associated protein 1, neuron-specific enolase and peripherin, and the glial marker glial fibrillary acidic protein. Neuronal and glial markers coexist in single cells. Furthermore, A1 cells show presence of glutamic acid decarboxylase 67 mRNA and its embryonic form EP10 and accumulate the neurotransmitter GABA. Electrophysiological studies demonstrate that morphologically differentiated A1 cells display voltage-gated sodium and potassium channels in response to depolarizing stimuli. A1 cells thus represent a novel, bipotent neural cell line useful for studying CNS differentiation and plasticity, as well as the molecular mechanisms underlying development of GABAergic neurotransmission.