Murine P19 embryonal carcinoma (EC) cells can be differentiated into various germ layer derivatives. The addition of retinoic acid (RA) to P19-EC cell aggregates results in a transient activation of receptor protein tyrosine phosphatase-alpha (RPTP alpha). Subsequent replating of these aggregates leads to neuronal differentiation. P19-EC cells expressing constitutively active RPTP alpha (P19-RPTP alpha) show extensive neuronal differentiation upon RA treatment in monolayer. P19-RPTP alpha cells thus provide a suitable in vitro model for studying neuronal differentiation. We used P19-RPTP alpha cells to study the effects of activin and basic fibroblast growth factor (bFGF) on neurogenesis. We show that P19-RPTP alpha cells express mRNA for types I and II activin receptors. RA addition causes an up-regulation of receptor type IIA expression. Complexes of type I and II receptors were detectable by cross-linking assays both before and after RA treatment. Receptor complexes were functional as determined by transient transfection assays with activin responsive reporter constructs. Undifferentiated as well as differentiated P19-RPTP alpha cells express also the FGF receptors (FGFRs) FGFR-1 and FGFR-2 but not FGFR-3 and FGFR-4. Their functionality was established by bFGF induced mitogen-activated protein kinase phosphorylation. Activin and bFGF appeared to exert differential actions on RA-induced neuronal differentiation. Although activin irreversibly changes the differentiation fate into nonneuronal directions, bFGF does not affect initial neurogenesis but regulates axonal outgrowth in a concentration-dependent way; low concentrations of bFGF enhance axonal outgrowth, whereas high concentrations inhibit this process. These results strengthen the notion that activin and bFGF are important regulators of neurogenesis in the mammalian embryo.