Neurite formation and proliferation by NG108-15 cells were studied in short-term serum-free N2 medium. Neuritogenesis by individual cells was observed at widely differing times, suggesting a stochastic component to initiation of differentiation. Cells with and without neurites could also enter one or more rounds of proliferation at varying times. The initial choice between these divergent behaviors influenced subsequent growth. Cells initially extending neurites had a high probability of continuing neuritic elongation. Cells initially dividing had a high probability of yielding further progeny. Addition of dibutyryl cyclic AMP to cells cultured in N2 medium rapidly increased the probability of differentiating and decreased the probability of proliferating. To test whether or not cells with highly differentiated morphologies had irreversibly lost the capacity for proliferation, induced cultures were washed and challenged by the addition of serum-containing medium. The length of time required for individual cells to divide increased with increasing time of preincubation in the induction medium. However, few cells appeared to be permanently removed from the proliferative pool. These observations suggest that differentiating cells exhibit persistence, a tendency to continue on the differentiation pathway. Persistence is extinguished following one round of proliferation in serum-containing medium.