A series of studies from our laboratory has established an aggregate culture system of fetal rat brain cells that can serve as a model for studying regulatory processes of the developing neuropeptide Y (NPY)-producing neurons. Using aggregate cultures derived from 17-day-old fetal rat cortex, we addressed these questions: 1) Does brain-derived neurotrophic factor (BDNF) stimulate NPY production, and if so, is stimulation a function of the developmental state of the cultured NPY neuron? 2) Does BDNF induce phenotypic differentiation of NPY neurons? BDNF led to an increase in NPY production and the accumulation of NPY-mRNA in a dose dependent manner. BDNF did not alter the stability of NPY-mRNA, judged by the disappearance rate of NPY-mRNA after blockade of RNA synthesis (estimated t1/2 was 6-8 hr). BDNF stimulation of NPY production was dependent on length of exposure to BDNF and on culture-age. A continuous 8-day exposure to BDNF resulted in a significantly higher level of NPY production than a pulse of 2 days (comparing BDNF exposure on days 0-8 vs. 6-8, or days 8-17 vs. 15-17). Moreover, older neurons (age 17 days) produced twice as much NPY as younger (age 8 days) neurons in response to a 2-day pulse of BDNF (50 ng/ml). BDNF was significantly more effective than NT-3 in inducing NPY production, and NGF was ineffective. Immunocytochemical analysis of 8-day NPY neurons revealed that a 2-day pulse of BDNF induced the appearance of an abundance of morphologically well-defined neurons bearing an elaborate network of neurites. This was in contrast to the control-treated NPY neurons, which were morphologically undefined. In summary, the age-dependent effect of BDNF on NPY production is consistent with induction of functional expression, rather than promotion of survival, of cultured NPY neurons. The neurotrophin specificity for stimulation of NPY production, and the lack of effect of BDNF on the stability of NPY-mRNA, implicate the TrkB receptor in mediating transcriptional activation of the NPY gene. Thus, BDNF exerts a dual effect on developing cultured NPY neurons: induction of functional expression, and phenotypic differentiation of immature neurons into mature neurite-bearing neurons.