We previously developed a reaggregate cell culture system (pellet cultures) in which retinal neuroepithelial cells proliferate and give rise to rod photoreceptor cells (rods) in vitro (Watanabe and Raff, 1990, Neuron 4:461-467). In the present study, we analyzed cell differentiation and morphogenesis in pellet cultures by using both cell-type-specific markers with immunofluorescence and electron microscopy. We demonstrated that, in addition to rods, the other major retinal cell types, including amacrine cells, bipolar cells, Müller cells, and ganglion cells were all present in the pellets, where most were able to develop from dividing precursor cells in vitro. The different cell types in the pellets became organized into two distinct structures: dark rosettes and pale rosettes. The cellular composition of these structures indicated that the dark rosettes correspond to the outer nuclear layer and the pale rosettes to the inner nuclear layer of the normal retina. Ultrastructural studies have indicated that the thin layer of neuronal processes surrounding the dark rosettes correspond to the outer plexiform layer, and the central region of the pale rosettes correspond to the inner plexiform layer of the normal retina. Other features of normal retinal development also occurred in the pellets, including programmed cell death and the formation of inner and outer rod cell segments and synapses. Thus, pellet cultures provide a convenient way to study different aspects of retinal development where one can control the size and the cellular composition of the initial reaggregate.