ATP, an important signalling substance in the central nervous system, is hydrolysed to adenosine via a surface-located enzyme cascade. The final hydrolysis step from AMP to adenosine is catalysed by 5'-nucleotidase, a GPI-anchored surface protein. 5'-Nucleotidase is transiently expressed on developing neurones. An antisense oligonucleotide that suppresses the synthesis of 5'-nucleotidase inhibits NGF-induced neurite formation and survival in PC12 cells and cultures of cerebellar granule cells. The inhibitory effect of the antisense oligonucleotide can be completely or partially relieved by addition of soluble 5'-nucleotidase or of nucleosides to the medium. Our results suggest that 5'-nucleotidase is essential for the differentiation and survival of neural cells and represents an important and critical step in the hydrolysis cascade of extracellular nucleotides.