After implantation into the external germinal layer of early postnatal cerebellum, primary external germinal layer progenitor cells gave rise exclusively to granule neurons. In contrast, all major classes of cerebellar cells were observed following implantation of embryonic day 13 cerebellar precursor cells into the external germinal layer. These results suggest that granule cells arise from precursors with a restricted potential. In contrast to results with the primary external germinal layer population, cell lines established from external germinal layer cells, by infection with a retrovirus containing the SV40 large T-antigen oncogene, gave rise to several cerebellar cell types upon implantation. These included granule neurons, one subclass of stellate interneurons, Golgi cells, Bergmann glia and astrocytes. From these results, we conclude that early postnatal external germinal layer progenitors are normally fated to a granule cell identity and that expression of the SV40 large T-antigen oncogene subverts mechanisms that control granule neuron fate.