A theory of simultaneous nucleation and drop growth in a supersaturated vapor is developed. The theory makes use of the concept of "nearest-neighbor" drops. The effect of vapor heterogeneity caused by vapor diffusion to a growing drop, formed previously, is accounted for by considering the nucleation of the nearest-neighbor drop. The diffusional boundary value problem is solved through the application of a recent theory that maintains material balance between the vapor and the drop, even though the drop boundary is a moving one. This is fundamental to the use of the proper time and space dependent vapor supersaturation in the application of nucleation theory. The conditions are formulated under which the mean distance to the nearest-neighbor drop and the mean time to its appearance can be determined reliably. Under these conditions, the mean time provides an estimate of the duration of the nucleation stage, while the mean distance provides an estimate of the number of drops formed per unit volume during the nucleation stage. It turns out, surprisingly, that these estimates agree fairly well with the predictions of the simpler and more standard approach based on the approximation that the density of the vapor phase remains uniform during the nucleation stage. Thus, as a practical matter, in many situations, the use of the simpler and less rigorous method is justified by the predictions of the more rigorous, but more complicated theory. (C) 2004 American Institute of Physics.