Activin/EDG, a stimulator of the secretion of follicle stimulating hormone (FSH) from pituitary gland and an inducer of erythroid differentiation for Friend leukemia cells, has since been implicated in a variety of biological roles. Here, we show some novel effects of activin on murine embryonal carcinoma cells (EC cells). First, activin acts as a growth factor on undifferentiated P19 cells, a well characterized EC cell line for the study of mammalian development. Second, activin inhibits the retinoic acid (RA) induced differentiation of P19 cells to neurons and glial cells. The inhibitory effect of activin on neural differentiation, which has yet to be proved in other physiological peptides, is confirmed also on the differentiation of various neuroblastoma cell lines. Our results suggest a possible role of activin as a negative regulator of neural differentiation in mammalian development.