The neuronal cytoskeleton is essential for establishment of neuronal polarity, but mechanisms controlling generation of polarity in the cytoskeleton are poorly understood. The nonreceptor tyrosine kinase, Fer, has been shown to bind to microtubules and to interact with several actin-regulatory proteins. Furthermore, Fer binds p120 catenin and has been shown to regulate cadherin function by modulating cadherin-beta-catenin interaction. Here we show involvement of Fer in neuronal polarization and neurite development. Fer is concentrated in growth cones together with cadherin, beta-catenin, and cortactin in stage 2 hippocampal neurons. Inhibition of Fer-p120 catenin interaction with a cell-permeable inhibitory peptide (FerP) increases neurite branching. In addition, the peptide significantly delays conversion of one of several dendrites into an axon in early stage hippocampal neurons. FerP-treated growth cones also exhibit modified localization of the microtubule and actin cytoskeleton. Together, this indicates that the Fer-p120 interaction is required for normal neuronal polarization and neurite development.