The formation of unique areas of the cerebral cortex during development is prerequisite for functional specialization. We have extended our earlier transplant studies to show that progenitor cells are particularly sensitive to environmental signals that control areal fate determination. Using expression of the limbic system-associated membrane protein (LAMP) as an assay for limbic phenotype, we have shown that progenitors isolated from different domains of presumptive neocortex and grown in culture can respond to LAMP-inducing signals. Members of the epidermal growth factor receptor family, including those responsive to TGF and heregulin, can mediate cell fate decisions that occur independent of effects on proliferation or survival. These early decisions by progenitors to express a limbic molecular phenotype have implications for subsequent events of cortico-cortical and thalamo-cortical connectivity that underlie normal limbic system function.