Although ciliary neurotrophic factor (CNTF) is a potent survival factor for many types of neurons and glial cells in vitro, there is currently no evidence that it participates in normal development. Here we show that CNTF greatly enhances the rate of oligodendrocyte generation. Proliferation of oligodendrocyte precursor cells purified from rodent optic nerves and cultured in platelet-derived growth factor-containing medium is significantly increased by CNTF. Similarly, the number of proliferating oligodendrocyte precursor cells in developing optic nerves of transgenic mice lacking CNTF is decreased by up to threefold and the number of oligodendrocytes is transiently decreased; proliferation is restored to normal by the delivery of exogenous CNTF into the developing optic nerve. Both oligodendrocyte number and myelination ultimately attain wild-type values in CNTF-deficient adult mice, indicating that CNTF is not necessary for either oligodendrocyte differentiation or myelination, although it normally accelerates oligodendrocyte development by enhancing the proliferation of oligodendrocyte precursor cells.