Local application of sphingosine (1–10 microM), an inhibitor of protein kinase C, to NGF-supplied, distal neurites of rat sympathetic neurons in compartmented cultures caused their retraction and/or degeneration within 24 hr. This effect was specific for distal neurites because sphingosine (even at 100 microM) applied to cell bodies and/or proximal neurites did not destroy these regions of the cells, and their distal neurites continued to elongate. However, effects of other agents suggest that the retraction/degeneration observed in distal neurites directly exposed to sphingosine is not mediated by inhibition of protein kinase C: application of staurosporine, another inhibitor of protein kinase C, to distal neurites did not cause retraction or degeneration; treatment of neurons for 24 or more hours with 2 microM phorbol 12-myristate 13-acetate (PMA), used to downregulate protein kinase C activity, slowed neurite extension about 50%, but did not cause degeneration; and neurons pretreated with PMA still displayed retraction/degeneration of neurites when they were subsequently exposed to sphingosine. Also, replacement of NGF supplied to distal neurites with anti-NGF IgG did not cause retraction/degeneration of neurites within 1 d, suggesting that the effect of sphingosine did not arise by interference with the action of NGF. The specificity of the sphingosine- induced retraction/degeneration for distal neurites suggests that this effect operates via specific mechanisms in distal neurites that can trigger their retraction/degeneration. Such mechanisms could play important roles in nerve growth inhibition, nerve fiber retraction, and degeneration that occur normally in the nervous system and in response to injury and disease. Also, the ability of neurites to grow in the presence of PMA suggests that neurite growth is not dependent upon the activity of protein kinase C. However, the reduced rate of neurite extension in the presence of PMA suggests that chronic PMA treatment may affect mechanism(s) that can modulate neurite growth.