The question of how appropriate cell types are generated in correct numbers during development of the peripheral nervous system has become particularly intriguing with the identification of multipotent progenitor cells in postmigratory targets of the neural crest. Recently, we have provided evidence that community effects in response to factors of the TGFbeta family might represent a mechanism to suppress inappropriate nonneural fates from multipotent progenitors in developing peripheral ganglia. In culture, BMP2 and TGFbeta promote neurogenesis at the expense of a smooth-muscle-like fate in clusters of neural-crest-derived multipotent progenitor cells. We now show that the neurons generated by TGFbeta factors belong to the autonomic lineage and that cells within the developing sympathetic ganglia express TGFbeta-type II receptor. In addition to its neurogenic activity, TGFbeta but not BMP2 also induces apoptosis as an alternative fate in cultured progenitor communities. Interestingly, these fate decisions are controlled by graded changes in TGFbeta concentrations: lower doses of TGFbeta promote neurogenesis while slightly higher doses induce predominantly apoptosis. These effects of TGFbeta are specific for an early developmental stage since progenitor cells lose their competence to respond to the proapoptotic activity of TGFbeta upon neuronal differentiation. In vivo, the expression of TGFbeta3 in differentiated neurons suggests that the signal concentration gradually increases with the number of neurons formed in the autonomic ganglia. We propose that TGFbeta functions in a biphasic manner during autonomic gangliogenesis to control both neurogenesis and subsequently the number of neurons generated from progenitor cells.