Developing neurons encounter a panoply of extracellular signals as they differentiate. A major goal is to identify these extrinsic cues and define the mechanisms by which neurons simultaneously integrate stimulation by multiple factors yet initiate one specific biological response. Factors that are known to exert potent activities in the developing nervous system include the NGF family of neurotrophic factors, ciliary neurotrophic factor (CNTF), and pituitary adenylate cyclase-activating peptide (PACAP). Here we demonstrate that PACAP promotes the differentiation of nascent dorsal root ganglion (DRG) neurons in that it increases both the number of neural-marker-positive cells and axonogenesis without affecting the proliferation of neural progenitor cells. This response is mediated through the PAC1 receptor and requires MAP kinase activation. Moreover, we find that, in the absence of exogenously added PACAP, blockade of the PAC1 receptor inhibits neuronal differentiation. These data coupled with our finding that both PACAP and the PAC1 receptor are expressed during the peak period of neuronal differentiation in the DRG suggest that PACAP functions in vivo to promote the differentiation of nascent sensory neurons. Interestingly, we also demonstrate that the neurotrophic factors NT-3 and CNTF completely block the PACAP-induced neuronal differentiation. This points to the intricate integration of cellular signals by nascent neurons and, to our knowledge, is the first evidence for neurotrophic factor abrogation of a pathway regulated by G-protein-coupled receptors (GPCRs).