Application of nerve growth factor (NGF) to PC12 cells stimulates a programme of physiological changes leading to the development of a sympathetic neuron like phenotype, one aspect of which is the development of a neuronal morphology characterised by the outgrowth of neuritic processes. We have investigated the role of phosphoinositide 3-kinase in NGF-stimulated morphological differentiation through two approaches: firstly, preincubation with wortmannin, a reputedly specific inhibitor of phosphoinositide kinases, completely inhibited initial morphological responses to NGF, the formation of actin filament rich microspikes and subsequent neurite outgrowth. This correlated with wortmannin inhibition of NGF-stimulated phosphatidylinositol(3,4,5)trisphosphate (PtdInsP3) and phosphatidylinositol(3,4)bisphosphate (PtdIns(3,4)P2) production and with inhibition of NGF-stimulated phosphoinositide 3-kinase activity in anti-phosphotyrosine immunoprecipitates. Secondly, the overexpression of a mutant p85 regulatory subunit of the phosphoinositide 3-kinase, which cannot interact with the catalytic p110 subunit, also substantially inhibited the initiation of NGF-stimulated neurite outgrowth. In addition, we found that wortmannin caused a rapid collapse of more mature neurites formed following several days exposure of PC12 cells to NGF. These results indicate that NGF-stimulated neurite outgrowth requires the activity of a tyrosine kinase regulated PI3-kinase and suggest that the primary product of this enzyme, PtdInsP3, is a necessary second messenger for the cytoskeletal and membrane reorganization events which occur during neuronal differentiation.