The normal adult vertebrate nervous system is a relative quiescent tissue in terms of cell proliferation. However, astrocytes in many regions of the central nervous system (CNS) retain the capacity to undergo cell division. To examine the mechanisms that regulate the proliferation of astrocytes in the CNS we have utilized an in vitro assay in which astrocyte density and cellular environment could be regulated. We demonstrate that type 1 astrocytes derived from the cerebral cortex of developing rats exhibit a profound density-dependent inhibition of proliferation. This inhibition of proliferation was cell type specific, but not restricted to type 1 astrocytes. NIH 3T3 cells but not smooth muscle cells inhibited astrocyte proliferation, while contact-inhibited astrocytes did not inhibit oligodendrocyte proliferation. Co-culture of type 1 astrocytes with neurons from a variety of sources resulted in induction of a process-bearing astrocyte morphology and promoted glial cell proliferation. Thus, induction of a process-bearing astrocyte morphology does not lead to a cessation of proliferation. The inhibition of astrocyte proliferation did not appear to be mediated through the release or sequestration of soluble factors but rather could be induced by membrane-associated factors.