When a primary culture of E16 rat striatal cells was grown in a serum-free medium, treatment with basic fibroblast growth factor (bFGF, 10 ng/ml) caused the generation of the progenitor cell for oligodendrocytes and type-2 astrocytes (O-2A). Immunostaining tests confirmed that > 90% of the cells were positive for A2B5, and < 5% positive for glial fibrillary acidic protein (GFAP). When E14, mesencephalic, dopaminergic neurons were co-cultured with established O-2A progenitor cells in a serum-free growth medium, the survival of tyrosine hydroxylase-positive (TH+) neurons increased 23-fold and 668-fold at the 5th and 10th days, respectively, compared with control cultures plated on poly-D-lysine. Conditioned medium from the O-2A progenitor cultures also decreased the death of TH+ neurons. The mitotic inhibitor, cytosine arabinoside (1.0 microM), did not block the protective effect of the O-2A progenitor cells. O-2A progenitor cells produce a potent, soluble factor, that mediates the increased survival of dopaminergic neurons in vitro.