Soon after the initial release of 386BSD, three groups developed off the existing source. BSD/386 came first, which was later to become the commercial BSD/OS. NetBSD developed off the 386BSD 0.1 release, and was the first free software organization founded on BSD. This was shortly followed by FreeBSD. While these systems were being developed, the Computer Science department at the University of California, Berkeley continued development, and had progressed to 4.4BSD.
Development on 386BSD sources would not continue for much longer. Due to licensing concerns with AT&T, some potentially so-called encumbered sources which existed within 386BSD were to be removed from all the derived systems, and the development of 386BSD was to be stopped. Berkeley subsequently removed the Net/2 tapes from distribution, and replaced them with 4.4BSD-Lite, which existed without the code that AT&T claimed patents on.
With the development of 386BSD halted, FreeBSD and NetBSD continued the free development of the BSD derived operating systems. NetBSD continued their development off of the NET/2 tapes with 4.4BSD-Lite filling in for most of the encumbered source. FreeBSD resynced nearly all their source with 4.4BSD-Lite and rebuilt what parts were missing themselves, keeping very little of the 386BSD code.
Work continues on these 386BSD derived operating systems today, along with several derivatives thereof (such as Apple's Darwin and OpenBSD).