During development of the cerebellum, Sonic hedgehog (SHH) is expressed in migrating and settled Purkinje neurons and is directly responsible for proliferation of granule cell precursors in the external germinal layer. We have previously demonstrated that SHH interacts with vitronectin in the differentiation of spinal motor neurons. Here, we analysed whether similar interactions between SHH and extracellular matrix glycoproteins regulate subsequent steps of granule cell development. Laminins and their integrin receptor subunit alpha6 accumulate in the outer most external germinal layer where proliferation of granule cell precursors is maximal. Consistent with this expression pattern, laminin significantly increases SHH-induced proliferation in primary cultures of cerebellar granule cells. Vitronectin and its integrin receptor subunits alpha(v) are expressed in the inner part of the external germinal layer where granule cell precursors exit the cell cycle and commence differentiation. In cultures, vitronectin is able to overcome SHH-induced proliferation, thus allowing granule cell differentiation. Our studies indicate that the pathway in granule cell precursors responsible for the conversion of a proliferative SHH-mediated response to a differentiation signal depends on CREB. Vitronectin stimulates phosphorylation of cyclic-AMP responsive element-binding protein (CREB), and over-expression of CREB is sufficient to induce granule cell differentiation in the presence of SHH. Taken together, these data suggest that granule neuron differentiation is regulated by the vitronectin-induced phosphorylation of CREB, a critical event that terminates SHH-mediated proliferation and permits the differentiation program to proceed in these cells.