Immortalized neural precursor cell lines carrying the polyoma large tumor (T) gene have been shown previously to retain a clear-cut contact inhibition of growth and to differentiate in vitro. In the present study, we have identified and isolated cDNA clones corresponding to RNA expressed preferentially when these cells reach confluence. One of them, NPDC-1, is expressed specifically in the nervous system. The transfection of dividing cells with a NPDC-1 expression vector results in the inhibition of cell proliferation. In addition, the stable introduction of NPDC-1 into transformed cells, even of nonneural origin, leads to the suppression of transformed characteristics.