There is a significant body of evidence to suggest a physiological role for the CSF in both the developing and adult brain. Our recent studies suggest a critical role for this fluid in the developing brain of the hydrocephalic Texas (H-Tx) rat. A key feature of the foetalonset hydrocephalus in this rat is obstruction in the flow and/or absorption of fluid that is associated with abnormal development of the cerebral cortex resulting in a reduction in the number of neuronal precursors generated. Cells from the affected cerebral cortex do proliferate in vitro and show dose-dependent responses to growth factor stimulation, suggesting that germinal cells are under inhibitory influences in vivo. We tested the hypothesis that the CSF of the affected brains was responsible for the abnormal development. Cells analysed at the time of extraction from affected brains showed an accumulation of cells in the S-phase of the cell cycle, which was reflected in a concentration of cells containing high levels of DNA in the germinal matrix of histological sections of affected brains. CSF from the lateral ventricle of affected foetal brains not only inhibited in vitro proliferation of normal neuronal progenitors, but it also resulted in an accumulation of cells in the S-phase of the cell cycle mimicking the situation in vivo. Fluid from normal foetal brains did not have this effect. From the work detailed here on the mechanistic basis of the deficient cortical development in the foetal hydrocephalic rat brain, we conclude that the content of the CSF is critical in maintaining germinal matrix function and output and, therefore, that the CSF has a vital role in brain development.