Clinical and experimental evidence suggests that the development of the brain may be modulated by soluble growth factors traditionally associated with cells of the immune system. As part of an investigation into agents modulating early neural differentiation, we examined the effects of the lymphokine gamma-interferon (IFN-gamma) on the development of cultured cortical and hippocampal neurons from embryonic rats and mice. We report here that recombinant IFN-gamma, at concentrations of 0.2-10 U/ml (50-2500 pg/ml, 3-150 pM), affects the differentiation of embryonic central neurons. IFN-gamma increased the number of cells expressing neurofilament (NF) protein, the growth of primary and secondary neurites on NF-expressing somas, and the extent of cell aggregation observed in culture. IFN-gamma-induced increases in the numbers of NF-positive cells were seen in the virtual absence of differentiated astrocytes, and in mixed neuron-glia cultures. Our results thus indicate that at physiologically relevant concentrations IFN-gamma acts, either directly on neurons and their precursor cells and/or indirectly via nonneuronal cell stimulation, to promote the differentiation of immature neurons.