The differentiation of precursor cells into neurons or astrocytes in the developing brain has been thought to be regulated in part by growth factors. We show here that neural precursors isolated from the developing forebrain of mice that are deficient in the gene for the low-affinity leukemia inhibitory factor receptor (LIFR^−/−) fail to generate astrocytes expressing glial fibrillary acidic protein (GFAP) when cultured in vitro. Precursors from mice heterozygous for the null allele show normal levels of GFAP expression. These findings support the in vivo findings that show extremely low levels of GFAP mRNA in brains of embryonic day 19 LIFR^−/− mice. In addition, monolayers of neural cells from LIFR^−/− mice are far less able to support the neuronal differentiation of normal neural precursors than are monolayers from heterozygous or wild-type animals, indicating that endogenous signaling through the LIFR is required for the expression of both functional and phenotypic markers of astrocyte differentiation. LIFR^−/− precursors are not irreversibly blocked from differentiating into astrocytes: they express GFAP after long-term passaging or stimulation with bone morphogenetic protein-2. These findings strongly implicate the LIF family of cytokines in the regulation of astrocyte differentiation and indeed the LIF-deficient animals show a significant reduction in the number of GFAP cells in the hippocampus. However, because this reduction is only partial it suggests that LIF may not be the predominant endogenous ligand signaling through the LIFR.