Ascidian tadpole larvae, composed of only about 2500 cells, have a primitive nervous system which is derived from the neural plate. The stereotyped cell cleavage pattern and well characterized cell lineage in these animals allow the isolation and culture of identified blastomeres in variable combinations. Ascidian embryos express cell‐type‐specific markers corresponding to their cell fates, even when cultured under cleavage‐arrest by cytochalasin B. This system provides us with a unique opportunity to study the roles of cell lineage and cell contact in early neuronal differentiation in the absence of events associated with complex morphogenesis. In addition, the isolated, cleavage‐arrested blastomeres are ideally suited to electrical recording, permitting the use of ionic channels as specific markers for differentiation. In the cleavage‐arrested embryos, suppression of one type of K+ channel, and induction of two types of Na+ channels, occur following cell contact with the vegetal blastomere. The combination of molecular and electrophysiological analyses on this simple animal system may provide insights into the nature of the cell interactions important in early neurogenesis, both in ascidians and in vertebrates.