Neuronal thread proteins (NTPs) are a family of developmentally regulated molecules expressed in central nervous system (CNS) neurons and primitive neuroectodermal tumor (PNET) cell lines. NTP gene expression is modulated with DNA synthesis, neuritic sprouting, and neuronal differentiation. The present study explores the mechanism of insulin modulation of NTP gene expression during neuronal differentiation using PNET cell lines of CNS origin. PNET2 cells underwent neuronal differentiation with neurite outgrowth coupled with transient up-regulation of several species of NTP. In contrast, PNET1 cells failed to differentiate in response to insulin stimulation, although insulin receptors were more abundant than in PNET2 cells. Analysis of the insulin-mediated signal transduction pathway demonstrated that the lack of insulin responsiveness in PNET1 cells was primarily caused by impaired insulin-mediated tyrosyl phosphorylation of the insulin receptor substrate-1 (IRS-1). Correspondingly, the association between phosphatidyl-inositol 3 (PI3) kinase and phosphorylated IRS-1 was reduced in PNET1 compared with PNET2 cells. In contrast, the levels of IRS-1 protein were similar in PNET1 and PNET2 cells, and expression of the insulin receptor beta subunit (Ir beta) and insulin-mediated tyrosyl phosphorylation of the Ir beta were greater in PNET1 than PNET2 cells. The findings suggest that insulin effected neuronal differentiation and modulation of NTP gene expression in PNET cells utilizes a signal transduction cascade that requires tyrosyl phosphorylation of IRS-1.