Vasoactive intestinal peptide (VIP) is widely recognized as a regulator of tyrosine hydroxylase via a mechanism of trans-synaptic activation. Subsets of adrenal medullary cells and postganglionic sympathetic nerves coexpress the peptide neurotransmitter neuropeptide Y (NPY) with catecholamines. Using PC12 cells transiently expressing a fusion gene in which the bacterial enzyme chloramphenicol acetyltransferase (CAT) is under the control of 700 base pairs of the 5′ flanking region of the NPY gene, we have studied the role of VIP and the related peptide pituitary adenylate cyclase activating peptide (PACAP) in regulating NPY gene transcription. Both VIP and PACAP stimulated expression of the NPY gene through activation of cAMP-dependent protein kinase. PACAP was 1000-fold more potent in eliciting this response compared to VIP and activity resided in its N-terminal 27 amino acids. Both VIP and PACAP caused a subpopulation (approximately 50%) of PC12 cells to undergo profound morphological changes in that the cells extended long, slender neurites with prominent growth cones. This change in morphology was unaffected by preincubating cells with inhibitors of either cAMP- dependent protein kinase or calcium/phospholipid-dependent protein kinase. A trophic role for either VIP or PACAP in regulating sympathetic nerve function is proposed.