The processes by which undifferentiated cells are assigned to particular fates are far from clear. We review recent work that has examined this problem in the neural crest, a multipotential cell population that gives rise to peripheral neurons in vertebrates. Peripheral neuronal differentiation appears to occur in a series of developmental steps that can be regulated independently by signals in the environment. Furthermore, such steps are reflected by corresponding changes in the pattern of regulatory transcription factor expression in differentiating neural crest cells. The determination of neuronal identity may proceed by a series of parallel regulatory pathways involving transcription factors acting both in cascades and in combinatorial arrays.