Mice lacking Carboxypeptidase E (CPE) exhibit degeneration of hippocampal neurons caused by stress at weaning while over-expression of CPE in hippocampal neurons protect them against hydrogen peroxide-induced cell death. Here we demonstrate that CPE acts as an extracellular trophic factor to protect neurons. Rat hippocampal neurons pretreated with purified CPE protected the cells against hydrogen peroxide-, staurosporine- and glutamate-induced cell death. This protection was observed even when hippocampal neurons were treated with an enzymatically inactive mutant CPE or with CPE in the presence of its inhibitor, GEMSA. Purified CPE added to the culture medium rescued CPE knock-out hippocampal neurons from cell death. Both ERK and AKT were phosphorylated within 15 min after CPE treatment of hippocampal neurons and, using specific inhibitors, both signaling pathways were shown to be required for the neuroprotective effect. The expression of the anti-apoptotic protein, B-cell lymphoma 2 (BCL-2), was up-regulated after hippocampal neurons were treated with CPE. Furthermore, hydrogen peroxide induced down-regulation of BCL-2 protein and subsequent activation of caspase-3 were inhibited by CPE treatment. Thus, this study has identified CPE as a new neurotrophic factor that can protect neurons against degeneration through the activation of ERK and AKT signaling pathways to up-regulate expression of BCL-2.