The sympathetic innervation of rat sweat glands undergoes a target-induced switch from a noradrenergic to a cholinergic and peptidergic phenotype during development. Treatment of cultured sympathetic neurons with sweat gland extracts mimics many of the changes seen in vivo. Extracts induce choline acetyltransferase activity and vasoactive intestinal peptide expression in the neurons in a dose-dependent fashion while reducing catecholaminergic properties and neuropeptide Y. The cholinergic differentiation activity appears in developing glands of postnatal day 5 rats and is maintained in adult glands. It is a heat-labile, trypsin-sensitive, acidic protein that does not bind to heparin-agarose. Immunoprecipitation experiments with an antiserum directed against an N-terminal peptide of a cholinergic differentiation factor (CDF/LIF) from heart cells suggest that the sweat gland differentiation factor is not CDF/LIF. The sweat gland activity is a likely candidate for mediating the target-directed change in sympathetic neurotransmitter function observed in vivo.