In the present study, we examine rod photoreceptor development in dissociated-cell cultures of neonatal mouse retina. We show that, although very few rhodopsin+ rods develop in the presence of 10% foetal calf serum (FCS), large numbers develop in the absence of serum, but only if the cell density in the cultures is high. The rods all develop from nondividing rhodopsin- cells, and new rods continue to develop from rhodopsin- cells for at least 6-8 days, indicating that there can be a long delay between when a precursor cell withdraws from the cell cycle and when it becomes a rhodopsin+ rod. We show that FCS arrests rod development in these cultures at a postmitotic, rhodopsin-, pre-rod stage. We present evidence that FCS acts indirectly by stimulating the proliferation of Müller cells, which arrest rod differentiation by releasing leukaemia inhibitory factor (LIF). These findings identify an inhibitory cell-cell interaction, which may help to explain the long delay that can occur both in vitro and in vivo between cell-cycle withdrawal and rhodopsin expression during rod development.