Surface galactocerebroside (galC) was induced on cultured Schwann cells by two analogues of cyclic adenosine 3',5'-monophosphate (cAMP), dibutyryl cAMP and 8-bromo cAMP (as previously reported by Sobue and Pleasure) and also by forskolin, a potent adenylate cyclase activator. These reagents also induced a morphological transition of many of the Schwann cells, from an elongated spindle shape to flattened cells extending fenestrated cytoplasmic sheets. Surface galC and these changes in Schwann cell shape were not elicited by raising the extracellular cAMP concentration, nor by many compounds known to promote the differentiation of other cell types, suggesting that intracellular cAMP is the unique signal for their induction. The cAMP analogues also induced Schwann cell proliferation (as previously reported by Raff et al.), as did forskolin. The concentrations of cAMP analogues and forskolin eliciting largest increases in numbers of Schwann cells in the cultures were 10-fold lower than the concentrations required for optimal induction of Schwann cell surface galC.