An oncogene-carrying replication-defective retrovirus was used to establish immortalised lines of murine glial cells. Primary cultures of early postnatal cerebellar cells were infected with a retrovirus based on the Murine Moloney Leukemia Virus containing a temperature-sensitive mutant of the Simian Virus 40 large T antigen (SV40 T) oncogene and a gene coding for resistance to the antibiotic G418. Infected cells were selected in G418 and after several in vitro passages cells expressing the O4 antigen were established as a cell line. At a later time point O4-positive single-cell clones were established. Two different types of clones were obtained: 1) "plastic" clones consisting of cells which initially had a morphological and antigenic phenotype of young glial precursor cells but which gradually lost these features, and 2) "stable" cell clones including a clone with the immunological and electrophysiological characteristics of Schwann cells. Culture of the latter cells in the presence of 1 mM dibutyryl cyclic adenosine monophosphate for a period of at least 10 days induced a change in shape and a shift in antigen expression towards a more "differentiated" maturation stage. When the SV40 T O4-positive immortalised cell line isolated on the cell sorter was transplanted into demyelinated lesions in adult rats, cells were observed ensheathing axons and forming limited amounts of PNS-type myelin. Glial cells immortalised with a temperature-sensitive mutant of the SV40 T oncogene thus retain many physiological properties of their primary culture counterparts and can be induced to undergo limited differentiation in vitro and in vivo. These cell lines, which represent immature CNS glia or Schwann cells, are providing useful tools for investigating the role of cell surface antigens involved in neuron-glial interactions.