We have previously shown that protein kinase Cepsilon (PKCepsilon) induces neurite outgrowth via its regulatory domain and independently of its kinase activity. This study aimed at identifying mechanisms regulating PKCepsilon-mediated neurite induction. We show an increased association of PKCepsilon to the cytoskeleton during neuronal differentiation. Furthermore, neurite induction by overexpression of full-length PKCepsilon is suppressed if serum is removed from the cultures or if an actin-binding site is deleted from the protein. A peptide corresponding to the PKCepsilon actin-binding site suppresses neurite outgrowth during neuronal differentiation and outgrowth elicited by PKCepsilon overexpression. Neither serum removal, deletion of the actin-binding site, nor introduction of the peptide affects neurite induction by the isolated regulatory domain. Membrane targeting by myristoylation renders full-length PKCepsilon independent of both serum and the actin-binding site, and PKCepsilon colocalized with F-actin at the cortical cytoskeleton during neurite outgrowth. These results demonstrate that the actin-binding site is of importance for signals acting on PKCepsilon in a pathway leading to neurite outgrowth. Localization of PKCepsilon to the plasma membrane and/or the cortical cytoskeleton is conceivably important for its effect on neurite outgrowth.