The PC12 clone, developed from a pheochromocytoma tumor of the rat adrenal medulla, has become a premiere model for the study of neuronal differentiation. When treated in culture with nanomolar concentrations of nerve growth factor, PC12 cells stop dividing, elaborate processes, become electrically excitable, and will make synapses with appropriate muscle cells in culture. The changes induced by nerve growth factor lead to cells that, by any number of criteria, resemble mature sympathetic neurons. These changes are accompanied by a series of biochemical alterations occurring in the membrane, the cytoplasm, and the nucleus of the cell. Some of these events are independent of changes in transcription, while others clearly involve changes in gene expression. A number of the alterations seen in the cells involve increases or decreases in the phosphorylation of key cellular proteins. The information available thus far allows the construction of a hypothesis regarding the biochemical basis of PC12 differentiation.