It is known that activity modulates neuronal differentiation in the adult brain but the signalling mechanisms underlying this process remain to be identified. We show here that activity requires soluble amyloid precursor protein (sAPP) to enhance neurite outgrowth of young neurons differentiating from neural stem cells. Inhibition of sAPP secretion and anti-APP antibodies both abolished the effect of depolarization on neurite outgrowth, whereas exogenous sAPPalpha, similar to depolarization, induced neurite elongation. Depolarization and sAPPalpha both required active N-methyl-D-aspartic acid receptor (NMDAR) and mitogen-activated protein kinase (MAPK)/extracellular signal-regulated kinase (ERK) recruitment to induce neurite outgrowth. However, depolarization and sAPPalpha played different roles in modulating this signalling cascade. Depolarization induced ERK phosphorylation with fast kinetics via activation of NMDAR. By contrast, acute application of sAPPalpha did not lead to ERK activation. However, continuous generation of sAPPalpha was necessary for depolarization-induced ERK phosphorylation, indicating that sAPPalpha promotes MAPK/ERK recruitment by an indirect mechanism. In addition, we found that blockade of NMDAR down-regulated APP expression, whereas depolarization increased sAPPalpha, suggesting that activity may also act upstream of sAPP signalling by regulating the amount of cellular APP and extracellular sAPPalpha. Finally, we show that soluble amyloid precursor-like protein 2 (sAPLP2), but not sAPLP1, is functionally redundant to sAPP in promoting neurite outgrowth and that soluble members of the APP family require membrane-bound APP to enhance neurite outgrowth. In summary, these experiments indicate a novel role of APP family members in activity-dependent neuronal differentiation.