Bundles of ventral motoneuron axons cross the white matter of the spinal cord, emerge through the cord surface at the CNS-PNS transitional zone (TZ) and continue in the PNS as ventral rootlets. This study identifies immunohistochemical and morphometric changes which characterise the key events in early TZ formation in the rat. E18 is a landmark stage, since it is then that the major events of TZ differentiation are initiated. In the glial processes associated with the TZ, vimentin expression decreases, while that of GFAP increases. In the proximal rootlets the transient expression of CNS markers such as GFAP and of neural adhesion molecules such as HNK-1/N-CAM begin to decrease. Their resulting differential expression clearly defines the CNS-PNS interface. These changes coincide with the arrival of glial nuclei at the TZ. Cell clusters which appear on proximal ventral rootlet surfaces shortly after their emergence from the cord, have by E18 formed an extensive matrix of processes which segregates the axon bundle. This comprises the earliest of two well-defined barriers across the axon bundle. An important function may be to prevent Schwann cell invasion of the cord. Cluster cells display some immunohistochemical features in common with Schwann cells. The second barrier becomes fully established only at P2 and forms the definitive CNS-PNS interface. It consists of processes arising from astrocytes surrounding the TZ. Changes in the nuclear density of the cell types correspond closely to their segregating activity. The immunohistochemical and ultrastructural changes complement one another to deepen and enhance understanding of TZ development.