The seven major classes of cells of the vertebrate neural retina are generated from a pool of multipotent progenitor cells. Recent studies suggest a model of retinal development in which both the progenitor cells and the environment change over time (Cepko, C. L., Austin, C. P., Yang, X., Alexiades, M. and Ezzeddine, D. (1996). Proc. Natl. Acad. Sci. USA 93, 589-595). We have utilized a reaggregate culture system to test this model. A labeled population of progenitors from the embryonic rat retina were cultured with an excess of postnatal retinal cells and then assayed for their cell fate choices. We found that the postnatal environment had at least two signals that affected the embryonic cells' choice of fate; one signal inhibited the production of amacrine cells and a second affected the production of cone cells. No increase in cell types generated postnatally was observed. The source of the inhibitor of the amacrine cell fate appeared to be previously generated amacrine cells, suggesting that amacrine cell number is controlled by feedback inhibition. The progenitor cell lost its ability to be inhibited for production of an amacrine cell as it entered M phase of the cell cycle. We suggest that postmitotic cells influence progenitor cell fate decisions, but that they do so in a manner restricted by the intrinsic biases of progenitor cells.