Transplants of fetal ventral mesencephalic tissue are known to contain a mixture of two major dopamine (DA) neuron types: the A9 neurons of the substantia nigra pars compacta (SNpc) and the A10 neurons of the ventral tegmental area (VTA). Previous studies have suggested that these two DA neuron types may differ in their growth characteristics, but, because of technical limitations, it has so far been difficult to identify the two subtypes in fetal ventral mesencephalon (VM) grafts and trace their axonal projections. Here, we have made use of a transgenic mouse expressing green fluorescent protein (GFP) under the tyrosine hydroxylase promoter. The expression of the GFP reporter allowed for visualization of the grafted DA neurons and their axonal projections within the host brain. We show that the SNpc and VTA neuron subtypes in VM grafts can be identified on the basis of their morphology and location within the graft, and their expression of a G-protein-gated inwardly rectifying K+ channel subunit (Girk2) and calbindin, respectively, and also that the axonal projections of the two DA neuron types are markedly different. By retrograde axonal tracing, we show that dopaminergic innervation of the striatum is derived almost exclusively from the Girk2-positive SNpc cells, whereas the calbindin-positive VTA neurons project to the frontal cortex and probably also other forebrain areas. The results suggest the presence of axon guidance and target recognition mechanisms in the DA-denervated forebrain that can guide the growing axons to their appropriate targets and indicate that cell preparations used for cell replacement in Parkinson's disease will be therapeutically useful only if they contain cells capable of generating the correct nigral DA neuron phenotype.