Glial cells from neonatal MbetaP5 transgenic mice, which express bacterial beta-galactosidase (lacZ) under control of the myelin basic protein (MBP) promoter (Gow et al, 1992), were transplanted into the spinal cord or cerebral hemisphere of immunosuppressed normal and myelin-deficient (md) rats in order to assess the ability of the donor cells to survive, migrate, and differentiate within normal compared with myelin-deficient central nervous system (CNS). LacZ+ cells were detected as early as 6-7 days after transplantation into the low thoracic cord and by 10 days had spread rostrally to the brainstem and caudally to the sacral spinal cord. Initially, compact lacZ+ cells, lacking processes, were found associated with small blood vessels and with the glia limitans. Cells of this type persisted throughout the experiment. Later, lacZ+ cells with processes were seen along fiber tracts in the dorsal columns and, after intracerebral injection, subjacent to ventricular ependyma, as well as scattered in cerebral white and gray parenchyma. The extent of spread was comparable in md and normal rats, but in the md group, the success rate was higher, and more cells differentiated into process-bearing oligodendrocytes. Acceptance of xenografts in immunosuppressed recipients equaled that of allografts. The overall spread of grafted cells exceeded that of injected charcoal, indicating active migration. In contrast to earlier studies that identified oligodendrocytes based on morphology alone, this study has allowed us to identify and track oligodendrocytes based on myelin gene expression. We show some oligodendrocytes whose morphology is consistent with classical morphological descriptions, some that resemble astrocytes, and a class of compact perivascular oligodendrocyte-lineage cells that we suggest are migratory.