Lysosomal storage disorders constitute a large group of genetic diseases, many of which are characterized by mental retardation and other neurologic symptoms. The mechanisms of neural dysfunction remain poorly understood. Because neural progenitor cells (NPCs) are fundamentally important to normal brain development and function, we investigated NPC properties in a canine model of mucopolysaccharidosis VII (MPS VII). MPS VII is a lysosomal storage disorder characterized by defects in the catabolism of glycosaminoglycans. NPCs were isolated from the olfactory bulb, cerebellum, and striatal subventricular zone of normal and MPS VII (beta-glucuronidase-deficient) postnatal dog brains. Canine NPCs (cNPCs) from normal and MPS VII brains had similar growth curves, but cerebellar-derived cNPCs grew significantly slower than those derived from other regions. In differentiation assays, MPS VII cNPCs from the striatal subventricular zone and cerebellum generated fewer mature neuronal and/or glial cells than normal, and MPS VII olfactory bulb-derived cNPCs retained significantly more phenotypically immature cells. These differences were only present at the earliest time point after isolation; at later passages, there were no differences attributable to genotype. The data suggest that MPS VII cNPCs respond differently to developmental cues in vivo, probably because of the diseased neural microenvironment rather than intrinsic cellular deficits.