Ndel1 plays multiple roles in neuronal development but it is unknown whether its reported cysteine protease activity is important for these processes. Ndel1 is known to be critical for neurite outgrowth in PC12 cells where it works co-operatively in a complex with DISC1 to allow normal neuritogenesis. Through an initial interest in understanding the regulation of the expression of Ndel1 during neuronal differentiation, we have been able to show that Ndel1 expression and enzyme activity is up-regulated during neurite outgrowth in PC12 cells induced to neural differentiation. Heterologous expression of wild-type Ndel1 (Ndel1(WT)) in PC12 cells increases the percentage of cells bearing neurites in contrast to the catalytically dead mutant, Ndel1(C273A), which caused a decrease. Furthermore depletion of endogenous Ndel1 by RNAi decreased neurite outgrowth, which was rescued by transfection of the enzymatically active Ndel1(WT), but not by the Ndel1(C273A) mutant. Together these data support the notion that the endooligopeptidase activity of Ndel1 plays a crucial role in the differentiation process of PC12 cells to neurons. Genetic data and protein interaction with DISC1 might suggest a role for Ndel1 in neuropsychiatirc conditions.