The objectives of this study were to demonstrate the presence and nature of abnormal cortical development in a rat model of hydrocephalus, the hydrocephalic Texas (H-Tx) rat, and to test the hypothesis that the obstruction of CSF flow in affected animals can be linked to this effect. CSF is secreted continuously by the choroid plexus, located in the lateral, third and fourth ventricles. The fluid flows through the ventricular system, passing over all regions of germinal activity. In the H-Tx rat, obstruction and eventual blockage of CSF flow occurs in the cerebral aqueduct, between the third and fourth ventricles, at embryonic day 18. Prior to obstruction, neurogenesis and migration occur as in normal rats. Here we show that, following obstruction of fluid flow, neurogenesis from the germinal epithelium becomes abnormal. Cell proliferation decreases and proliferating cells are not retained in the germinal layer, as they appear to be in the normal brain. Cell migration is apparently unaffected, although a decrease in the number of migrating cells does occur after CSF obstruction. These data from our study indicate that a rapid primary effect of CSF obstruction, prior to any mechanical effects of fluid accumulation, is to alter the activity of cells in the germinal epithelium of the developing cortex. Further evidence for this is gained from in vitro studies. Once removed from their in vivo environment, cortical cells from the H-Tx rat have the ability to proliferate as normal. CSF extracted from the enlarged ventricles of affected brains is able to inhibit the proliferation of normal cells. Thus, we hypothesize that CSF has a potential role in the developmental process. The damming up and accumulation of CSF, whatever the cause, may result in abnormal cortical development through accumulation of CSF factors that are, or become, inhibitory to normal neuronal proliferation.