The rat olfactory bulb is an exceptional CNS tissue. Unlike other areas of the brain, growing axons are able to enter the olfactory bulb and extend within this CNS environment throughout adult life. It appears that the glial cells of the olfactory system, known as olfactory bulb ensheathing cells (OBECs), may have an important role in this remarkable process of CNS neural regeneration. OBECs are unusual glial cells, possessing properties of both astrocytes and Schwann cells. In this study we show that astrocytes (in the form of astrocyte-conditioned medium; ACM) produce two critical regulatory functions for OBECs: mitogenic activity and a survival factor. Interestingly, the ACM-derived activity for OBECs appears to reside in a signalling protein(s) belonging to the neuregulin (NRG) family of growth factors, and specifically appears to coincide with one or more products of the nrg-1 gene. Our observations provide evidence for the following: recombinant human neu differentiation factors (NDFbeta1, -2 and -3) are mitogenic to OBECs; the activity in ACM can be neutralized by NDF antibodies; these same antibodies detect a 50-kDa, non-heparin binding protein in concentrated ACM; astrocytes express detectable nrg-1 transcripts; and OBECs express functional NRG receptors erbB2 and erbB4.