We have isolated neural precursors from the striata of embryonic wild-type and transgenic mice ubiquitously expressing enhanced green fluorescent protein. Cells were expanded in vitro in the presence of epidermal growth factor and transplanted into the retina of young postnatal mice. One month after transplantation, cells showed widespread integration into the host tissue and differentiated into a variety of morphologically distinct cell types. A fraction of cells was identified as oligodendrocytes exclusively located in the immediate vicinity to the nerve fiber layer. Similar results were obtained with neural precursors isolated from embryonic spinal cord. Differentiated oligodendrocytes and myelin were still detectable in the host tissue 4 months after transplantation, the latest time point investigated. Remarkably, prolonged survival periods of experimental animals resulted in a significant increase in the number of donor-derived oligodendrocytes and the area of the nerve fiber layer being myelinated. The presence of high numbers of oligodendrocytes and their location close to the retinal nerve fiber layer suggest that the differentiation of transplanted neural precursors into distinct neural cell types is influenced by host-derived environmental cues.