The cerebellar cortex comprises a rather limited variety of interneurons, prominently among them inhibitory basket and stellate cells and Golgi neurons. To identify mechanisms subserving the positioning, morphogenesis, and neurochemical maturation of these inhibitory interneurons, we analyzed their development in primary microexplant cultures of the early postnatal cerebellar cortex. These provide a well-defined, patterned lattice within which the development of individual cells is readily accessible to experimental manipulation and observation. Pax-2-positive precursors of inhibitory interneurons were found to effectively segregate from granule cell perikarya. They emigrate from the core explant and avoid the vicinity of granule cells, which also emigrate and aggregate into small clusters around the explant proper. This contrasts with the behavior of Purkinje neurons, which remain within the explant proper. During migration, a subset of Pax-2-positive cells gradually acquires a GABAergic phenotype, and subsequently also expresses the type 2 metabotropic receptor for glutamate, or parvalbumin, markers for Golgi neurons and basket or stellate cells, respectively. The latter eventually orient their dendrites such that they take a preferentially perpendicular orientation relative to granule cell axons. Both the neurochemical maturation of basket/stellate cells and the specific orientation of their dendrites are independent of their continuous contact with radially oriented glia or Purkinje cell dendrites projecting from the core explant. Numbers of parvalbumin-positive basket/stellate cells and the prevalence of glutamate-positive neurites, which form a dense network preferentially within cell clusters containing granule cell perikarya and their dendrites, are subject to regulation by chronic depolarization. In contrast, brain-derived neurotrophic factor results in a drastic decrease of numbers of basket/stellate cells. These findings document that granule cell axons (parallel fibers) are the major determinant of basket/stellate cell dendritic orientation. They also show that the neurochemical maturation of cerebellar interneurons is sensitive to regulation by activity and neurotrophic factors.