Cells dissociated from newborn rat forebrains were established in long term primary cultures. The cultures were made up almost exclusively of oligodendrocytes and astrocytes, as confirmed by indirect immunofluorescence staining with monoclonal antibodies to galactocerebroside and glial fibrillary acidic protein, respectively. After 3 weeks of culture, the oligodendrocytes were also highly immunoreactive to monospecific polyclonal antibodies against cytochrome P450scc, an enzyme involved in the conversion of cholesterol to pregnenolone (P). Biosynthesis of [3H]cholesterol, [3H]P, and [3H]Pregn-5-ene-3 beta, 20 alpha-diol was demonstrated in these primary cultures by incubating cells with [3H]mevalonolactone in the presence of mevinolin and trilostane. The activity of the 2',3'-cyclic nucleotide 3'-phosphodiesterase enzyme, a documented indicator of oligodendrocyte differentiation, increased rapidly after day 10 of culture, together with the onset of steroid biosynthetic activity. Both reached a maximum at 3 weeks of culture and remained stable up to 6.5 weeks. In the absence of trilostane, [3H]P was converted by glial cell cultures to [3H]progesterone, [3H]5 alpha-pregnane-3,20-dione, and [3H]3 alpha-hydroxy-5 alpha-pregnan-20-one. The demonstration of P, pregn-5-ene-3 beta,20 alpha-diol, and progesterone synthesis by normal rat glial cells, once oligodendrocytes have undergone their differentiation process, brings additional support to the concept of "neurosteroids."