Previous studies have indicated that newly formed oligodendrocytes are dynamic cells whose production, survival, and differentiation depend upon axonal influences. This study has characterized the appearance and fate of newly formed oligodendrocytes in developing rat brain. Oligodendrocytes appear in predictable locations and radially extend DM-20-positive processes that cover 80-microm domains in the cortex and 40-microm domains in the corpus callosum. These premyelinating oligodendrocytes have one of two fates: they myelinate axons or degenerate. Between 7 and 21 d after birth, approximately 20% of premyelinating oligodendrocytes identified in the cerebral cortex were degenerating. Oligodendrocytes that ensheathed axons expressed and selectively targeted proteolipid protein to compact myelin and did not degenerate. These observations support the hypothesis that axonal influences affect oligodendrocyte survival, differentiation, and expression of proteolipid protein gene products.