Target-derived neurotrophins initiate signals that begin at nerve terminals and cross long distances to reach the cell bodies and regulate gene expression. Neurotrophin receptors, Trks, themselves serve as retrograde signal carriers. However, it is not yet known whether the retrograde propagation of Trk activation reflects movement of Trk receptors from neurites to cell bodies or reflects serial activation of stationary Trk molecules. Here, we show that neurotrophins selectively applied to distal neurites of sensory neurons rapidly induce phosphorylation of the transcription factor cAMP response element-binding protein (CREB) and also cause a slower increase in Fos protein expression. Both nuclear responses require activation of neurotrophin receptors (Trks) at distal nerve endings and retrograde propagation of Trk activation to the nerve cell bodies. Using photobleach and recovery techniques to follow biologically active, green fluorescent protein (GFP)-tagged BDNF receptors (TrkB-GFP) in live cells during retrograde signaling, we show that TrkB-GFP moves rapidly from neurites to the cell bodies. This rapid movement requires ligand binding, Trk kinase activity, and intact axonal microtubules. When they reach the cell bodies, the activated TrkB receptors are in a complex with ligand. Thus, the retrograde propagation of activated TrkB from neurites to cell bodies, although rapid, reflects microtubule-dependent transport of phosphorylated Trk-ligand complexes. Moreover, the relocation of activated Trk receptors from nerve endings to cell bodies is required for nuclear signaling responses. Together, these data support a model of retrograde signaling whereby rapid vesicular transport of ligand-receptor complex from the neurites to the cell bodies mediates the nuclear responses.