While a b-sheet-rich form of the prion protein (PrPSc) causes neurodegeneration, the biological activity of its precursor, the cellular prion protein (PrPC), has been elusive. We have studied the effect of purified recombinant prion protein (recPrP) on rat fetal hippocampal neurons in culture. Overnight exposure to Syrian hamster or mouse recPrP, folded into an a-helical-rich conformation similar to that of PrPC, resulted in a 1.9-fold increase in neurons with a differentiated axon, a 13.5- fold increase in neurons with differentiated dendrites, a fivefold increase in axon length, and the formation of extensive neuronal circuitry. Formation of synaptic-like contacts was increased by a factor of 4.6 after exposure to recPrP for 7 days. Neither the N-terminal nor C-terminal domains of recPrP nor the PrP paralogue doppel (Dpl) enhanced the polarization of neurons. Inhibitors of protein kinase C (PKC) and of Src kinases, including p59Fyn, blocked the effect of recPrP on axon elongation, while inhibitors of phosphatidylinositol 3-kinase showed a partial inhibition, suggesting that signaling cascades involving these kinases are candidates for transduction of recPrP-mediated signals. The results predict that full-length PrPC functions as a growth factor involved in development of neuronal polarity.