Angiotensin II (Ang II) type 2 (AT2) receptors are abundantly expressed not only in the fetal brain where they probably contribute to brain development, but also in pathological conditions to protect the brain against stroke; however, the detailed mechanisms are unclear. Here, we demonstrated that AT2 receptor signaling induced neural differentiation via an increase in MMS2, one of the ubiquitin-conjugating enzyme variants. The AT2 receptor, MMS2, Src homology 2 domain-containing protein-tyrosine phosphatase 1 (SHP-1), and newly cloned AT2 receptor-interacting protein (ATIP) were highly expressed in fetal rat neurons and declined after birth. Ang II induced MMS2 expression in a dose-dependent manner, reaching a peak after 4 h of stimulation, and this effect was enhanced with AT1 receptor blocker, valsartan, but inhibited by AT2 receptor blocker PD123319. Moreover, we observed that an AT2 receptor agonist, CGP42112A, alone enhanced MMS2 expression. Neurons treated with small interfering RNA of MMS2 failed to exhibit neurite outgrowth and synapse formation. Moreover, the increase in AT2 receptor-induced MMS2 mRNA expression was enhanced by overexpression of ATIP but inhibited by small interfering RNA of SHP-1 and overexpression of catalytically dominant-negative SHP-1 or a tyrosine phosphatase inhibitor, sodium orthovanadate. After AT2 receptor stimulation, ATIP and SHP-1 were translocated into the nucleus after formation of their complex. Furthermore, increased MMS2 expression mediates the inhibitor of DNA binding 1 proteolysis and promotes DNA repair. These results provide a new insight into the contribution of AT2 receptor stimulation to neural differentiation via transactivation of MMS2 expression involving the association of ATIP and SHP-1.