We previously reported that Neospora caninum can be induced to express BAG1, a bradyzoite antigen, within 3 days of culture under stress conditions. The main goals of the present experiment were to increase the expression of BAG1 in vitro (in part by extending cultures for 9 days), to observe parasitophorous vacuoles at various points of stage differentiation, and to test the ability of organisms produced in vitro to function like mature bradyzoites. Expression of BAG1 and of a tachyzoite antigen (NcSAG1) was monitored using a double-label immunofluorescence assay. For the purpose of this study, organisms expressing NcSAG1 were designated as tachyzoites, those expressing BAG1 were designated as bradyzoites, and those expressing both antigens were designated as intermediate zoites. The greatest percentage of intermediate zoites and bradyzoites (14%) occurred in bovine monocytes maintained for 9 days. These bradyzoites did not appear to be functionally mature; they did not induce patent infections in dogs, in contrast to bradyzoites that were produced in chronically infected mice. In vitro, large parasitophorous vacuoles contained either a pure population of tachyzoites or a mixture of tachyzoites and intermediate zoites, which is indicative of asynchronous stage conversion of organisms within a vacuole. Bradyzoites were first observed within small vacuoles on day 6, and bradyzoites never shared vacuoles with tachyzoites. This finding suggests that vacuoles containing bradyzoites may develop only if the cell is invaded by a zoite that has already begun bradyzoite differentiation. An alternative possibility is that cysts may develop if the establishing tachyzoite undergoes bradyzoite differentiation before multiplying. Cysts do not appear to arise from transformation of tachyzoites within large parasitophorous vacuoles.