O-2A progenitor cells give rise to both oligodendrocytes and type-2 astrocytes in vitro. Whereas oligodendrocyte differentiation occurs constitutively, type-2 astrocyte differentiation requires extracellular signals, one of which is thought to be ciliary neurotrophic factor (CNTF). CNTF, however, is insufficient by itself to induce the development of stable type-2 astrocytes. In this report we show the following: (a) that molecules associated with the extracellular matrix (ECM) cooperate with CNTF to induce stable type-2 astrocyte differentiation in serum-free cultures. The combination of CNTF and the ECM-associated molecules thus mimics the effect of FCS, which has been shown previously to induce stable type-2 astrocyte differentiation in vitro. (b) Both the ECM-associated molecules and CNTF act directly on O-2A progenitor cells and can induce them to differentiate prematurely into type-2 astrocytes. (c) ECM-associated molecules also inhibit oligodendrocyte differentiation, even in the absence of CNTF, but this inhibition is not sufficient on its own to induce type-2 astrocyte differentiation. (d) Whereas the effect of ECM on oligodendrocyte differentiation is mimicked by basic fibroblast growth factor (bFGF), the effect of ECM on type-2 astrocyte differentiation is not. (e) The ECM-associated molecules that are responsible for inhibiting oligodendrocyte differentiation and for cooperating with CNTF to induce type-2 astrocyte differentiation are made by non-glial cells in vitro. (f) Molecules that have these activities and bind to ECM are present in the optic nerve at the time type-2 astrocytes are thought to be developing.