How do precursor cells know when it is time to stop dividing and differentiate? The phenomenon of lineage-specific progenitor cells undergoing a limited period of proliferation prior to terminal differentiation is a common theme in multicellular development. Despite this, little is understood about how these two events are co-ordinated during the normal schedule of development. I have studied the question of how proliferation and differentiation are co-regulated in the oligodendrocyte lineage in the rodent optic nerve. Oligodendrocytes are post-mitotic cells that myelinate axons in the vertebrate central nervous system. They develop from precursor cells whose maturation is controlled by a timer, which is an intrinsic property of the cells, that limits proliferation. The timer seems not to control the number of divisions the cell can undergo but rather the length of time during which divisions can occur. Significant effort has been devoted to understanding how the intracellular timer regulates oligodendrocyte development. The timer consists of two components that are modulated by distinct kinds of extracellular signals. Mitogens drive a timing component whose value increases as precursor cells continue to divide. Once this value exceeds a critical threshold, it signals that the proliferative period has elapsed, and hydrophobic signalling molecules trigger an effector component that elicits cell-cycle arrest and differentiation. The value of the timing component is determined by several intracellular molecules whose activities change as the timer runs. One of these molecules is the cell-cycle inhibitor p27: it accumulates in oligodendrocyte precursor cells as they proliferate in culture. When p27 expression is high the precursor cells are more likely to stop dividing and differentiate than when it is low. In oligodendrocyte precursor cells derived from mice that lack p27, the timer runs aberrantly and cell-cycle arrest and terminal differentiation are delayed. It is not understood how the molecular mechanics of the timer control oligodendrocyte development. Does the timer serve to arrest the cell-cycle, with differentiation following by default, or is cell-cycle arrest subordinate to the programme of terminal differentiation? These questions remain unanswered, largely because of a persistent inability to experimentally manipulate the genome of oligodendrocyte precursor cells. The present study was an attempt to overcome these problems and had two aims - first, to devise a reliable system for transfecting oligodendrocyte precursor cells and second, to determine whether the timer primarily controls the timing of cell-cycle arrest. I developed a new retroviral vector that co-expresses p27 and green fluorescent protein (GFP) in precursor cells. The use of GFP allows the identification of living precursor cells that over-express p27, which can then be followed over many days in culture. My findings support previous work showing that p27 plays a role in governing the timing of oligodendrocyte differentiation. They show that over-expression of p27 promotes oligodendrocyte differentiation by advancing the value of the timing component, although it does not promote differentiation if the effector component is inoperative. The cell-cycle time of precursor cells that over-express p27 is dramatically extended, but not stopped. It appears that a firm cell-cycle arrest and entry into a quiescent state may be required to elicit terminal differentiation.