The Rsu-1 Ras suppressor gene was isolated based on its ability to inhibit v-Ras transformation. Using Rsu-1 transfectants of the pheochromocytoma cell line PC12, we demonstrated previously that Rsu-1 expression inhibited Jun kinase activation but enhanced Erk2 activation in response to epidermal growth factor. In the present study, the Rsu-1 PC12 transfectants were used to investigate the role of Rsu-1 in nerve growth factor (NGF)- and v-Ki-ras-mediated neuronal differentiation. NGF-induced neurite extension was enhanced, not inhibited, by the expression of Rsu-1 in PC12 cells. The activation of Erk kinase activity in response to NGF was sustained longer in the Rsu-1 transfectants compared with the vector control cells. During NGF-mediated differentiation, an increase in the expression of specific mRNAs for the early response genes Fos, cJun, and NGF1a was detected in both the vector control and Rsu-1 transfectants. The expression of the differentiation-specific genes VGF8 and SCG10 was similar in Rsu-1 transfectants compared with the vector control cells. The induction of Rsu-1 expression in these cell lines did not inhibit v-Ki-ras-induced differentiation, as measured by neurite extension. These data suggest that although Rsu-1 blocked some Ras-dependent response(s), these responses were not required for differentiation. Moreover, the induction of Rsu-1 expression in the PC12 clones resulted in growth inhibition and p21(WAF/CIP) expression. Hence, Rsu-1 expression enhances NGF-induced differentiation while inhibiting the growth of cells.