We have studied nerve growth factor (NGF)-induced differentiation of PC12 cells to identify PKC isozymes important for neuronal differentiation. Previous work showed that tumor-promoting phorbol esters and ethanol enhance NGF-induced mitogen-activated protein (MAP) kinase activation and neurite outgrowth by a PKC-dependent mechanism. Ethanol also increases expression of PKCdelta and PKCepsilon, suggesting that one these isozymes regulates responses to NGF. To examine this possibility, we established PC12 cell lines that express a fragment encoding the first variable domain of PKCepsilon (amino acids 2-144), which acts as an isozyme-specific inhibitor of PKCepsilon in cardiac myocytes. Phorbol ester-stimulated translocation of PKCepsilon was markedly reduced in these PC12 cell lines. In addition, phorbol ester and ethanol did not enhance NGF-induced MAP kinase activation or neurite outgrowth in these cells. In contrast, phorbol ester and ethanol increased neurite outgrowth and MAP kinase phosphorylation in cells expressing a fragment derived from the first variable domain of PKCdelta. These results demonstrate that PKCepsilon mediates enhancement of NGF-induced signaling and neurite outgrowth by phorbol esters and ethanol in PC12 cells.