The developmental pattern of dorsal and ventral lateral plate mesoderm was examined by explanting these regions and culturing them in serum-free conditions for 10 days. Under these circumstances, ventral lateral plate mesoderm gave rise to hemopoietic cells, and dorsal lateral plate mesoderm gave rise to stromal cells. Comparison of the differentiation pattern observed when dorsal and ventral mesoderm were cultured separately versus the pattern observed when dorsal and ventral mesoderm were cultured together revealed that dorsal mesoderm influenced the differentiation of ventral-derived hemopoietic cells. Ventral mesoderm cultured alone gave rise to erythrocytes and granulocytes. However, in the presence of dorsal mesoderm, ventral mesoderm gave rise to erythrocytes, monocytes, and granulocytes. Moreover, dorsal mesoderm functioned to maintain the proliferation and differentiation potential of progenitor cells as determined using a colony-forming cell assay (CFU-c).