The expression of the cm2 muscarinic acetylcholine receptor gene increases dramatically in chick retina during embryonic development in vivo. A similar developmental increase in cm2 expression occurs in embryonic chick retinal cells in culture. Conditioned medium from mature, but not young, retinal cultures contains a secreted factor that causes a selective increase in expression of cm2, but not cm3 or cm4, receptors. The secreted factor has been partially purified from serum-free medium, is protease-sensitive, and has a molecular weight >10 kDa. The cm2-inducing factor stimulates expression of a cm2 promoter/luciferase reporter gene, demonstrating that the increase in cm2 expression is attributable to increased gene transcription. Incubation of retinal cells with 14 identified neurotrophic and growth factors did not increase cm2 expression, suggesting that a novel developmentally regulated secreted factor mediates the subtype-specific induction of the cm2 receptor gene in retina.