Building the complex mammalian neocortex requires appropriate numbers of neurochemically specified neurons. It is not clear how the highly diverse cortical interneurons acquire their distinctive phenotypes. The lack of genetic determination implicates environmental factors in this selection and specification process. We analysed, in organotypic visual cortex cultures, the specification of neurons expressing neuropeptide Y (NPY), a potent anticonvulsant. Endogenous brain-derived neurotrophic factor and neurotrophin 4/5 play no role in early NPY phenotype specification. Rather, the decision to express NPY is made during a period of molecular plasticity during which differentiating neurons with the potential to express NPY compete for the cytokine leukemia inhibitory factor which is produced in the cortex, but is negatively regulated by thalamic afferences. The neurons that fail in this competition are parvalbuminergic basket and chandelier neurons, which express NPY transiently, but will not acquire a permanent NPY expression. They switch into a facultative NPY expression mode, and remain responsive to the neurotrophins which modulate NPY expression later in development.