Ciliary neurotrophic factor (CNTF) and leukemia inhibitory factor (LIF) are members of a family of neuropoietic cytokines that have a broad range of actions on many different neuronal populations. In cultured sympathetic neurons, CNTF and LIF induce transcription of the VIP and other neuropeptide genes as part of a program of differentiation. To gain insight into the nuclear events involved in cytokine-mediated activation of the neuropeptide genes involved in neuronal differentiation, we have investigated the mechanisms of transcriptional activation of the vasoactive intestinal peptide (VIP) gene by the CNTF family of cytokines. In the neuroblastoma cell line NBFL, CNTF, LIF, and a related cytokine, oncostatin-M, activate VIP gene transcription through a 180-base pair cytokine response element (CyRE). Deletion analysis of the VIP CyRE showed that multiple regions within the 180 base-pairs are important for cytokine-mediated transcriptional activation of the VIP gene. To one of these regions within the CyRE, cytokine treatment induces binding of a protein complex composed of members of the signal transducers and activators of transcription (STAT) transcription factor family. Mutation of this STAT-binding site attenuates cytokine-mediated transcriptional activation. LIF treatment of primary sympathetic neurons also induced binding of a STAT-containing protein complex to the VIP CyRE. Thus, activation of STAT transcription factors contributes to the induction of the VIp gene by the CNTF family of cytokines and may be involved in cytokine-mediated differentiation of sympathetic neurons.