The Rac-GEF P-Rex1 promotes membrane ruffling and cell migration in response to Rac activation, but its role in neuritogenesis is unknown. Rac1 promotes neurite differentiation; Rac3, however, may play an opposing role. Here we report that in nerve growth factor (NGF)-differentiated rat PC12 cells, P-Rex1 localised to the distal tips of developing neurites and to the axonal shaft and growth cone of differentiating hippocampal neurons. P-Rex1 expression inhibited NGF-stimulated PC12 neurite differentiation and this was dependent on the Rac-GEF activity of P-Rex1. P-Rex1 inhibition of neurite outgrowth was rescued by low-dose cytochalasin D treatment, which prevents actin polymerisation. P-Rex1 activated Rac3 GTPase activity when coexpressed in PC12 cells. In the absence of NGF stimulation, targeted depletion of P-Rex1 in PC12 cells by RNA interference induced the spontaneous formation of beta-tubulin-enriched projections. Following NGF stimulation, enhanced neurite differentiation, with neurite hyper-elongation correlating with decreased F-actin at the growth cone, was demonstrated in P-Rex1 knockdown cells. Interestingly, P-Rex1-depleted PC12 cells exhibited reduced Rac3 and Rac1 GTPase activity. This study has identified P-Rex1 as a Rac3-GEF in neuronal cells that localises to, and regulates, actin cytoskeletal dynamics at the axonal growth cone to in turn regulate neurite differentiation.