Cholinergic properties of the SN56.B5.G4 cell line derived from the fusion of neurons of the mouse postnatal day 21 septum and the murine neuroblastoma cell line N18TG2 were investigated and correlated with morphological differentiation. In basal serum-containing growth medium, few cells developed neurites. Neurite extension occurred in cells grown for 2 d with forskolin or dibutyryl cAMP (dbcAMP) but not with butyrate. In cells treated with these compounds, the activity of ChAT and ACh content were two- to threefold higher relative to controls. The cells synthesized ACh from choline taken up by the sodium-dependent high-affinity transport. Forskolin-, dbcAMP-, and butyrate-treated cells (but not the controls) were capable of spontaneous and depolarization-evoked ACh release. The results indicate that the morphological and the neurochemical aspects of SN56.B5.G4 cell differentiation are independently regulated.