At early developmental stages (embryonic day 7, E7), chick paravertebral sympathetic ganglia contain a cell population that divides in culture while expressing various neuronal properties. In an attempt to identify factors that control neuronal proliferation, we found that ciliary neurotrophic factor (CNTF) specifically inhibits the proliferation of those cells expressing neuronal markers. In addition, CNTF affects the differentiation of sympathetic ganglion cells by inducing the expression of vasoactive intestinal peptide immunoreactivity (VIP-IR). After 1 day in culture, tyrosine hydroxylase immunoreactivity (TH-IR) was expressed by about 86% of the cells whereas VIP-IR was virtually absent. In the presence of CNTF, 50%-60% of the cells expressed VIP-IR after 4 days in culture; however, none of the cells expressed VIP-IR in the absence of CNTF. These results, and the demonstration of cells that express both VIP and TH-IR, indicate that VIP is induced in cells that initially express tyrosine hydroxylase. The findings suggest a potential role for CNTF as a factor affecting the proliferation and differentiation of developing sympathetic neurons.