The pathway by which atypical protein kinase C (aPKC) contributes to nerve growth factor (NGF) signaling is poorly understood. We previously reported that in PC12 cells NGF-induced activation of mitogen-activated protein kinase (MAPK) occurs independently of classical and nonclassical PKC isoforms, whereas aPKC isoforms were shown to be required for NGF-induced differentiation. NGF-induced activation of PKC-iota was observed to be dependent on phosphatidylinositol 3-kinase (PI3K) and led to coassociation of PKC-iota with Ras and Src. Expression of dominant negative mutants of either Src (DN2) or Ras (Asn-17) impaired activation of PKC-iota by NGF. At the level of Raf-1, neither PKC-iota nor PI3 kinase was required for activation; however, PKC-iota could weakly activate MEK. Inhibitors of PKC-iota activity and PI3K had no effect on NGF-induced MAPK or p38 activation but reduced NGF-stimulated c-Jun N-terminal kinase activity. Src, PI3K, and PKC-iota were likewise required for NGF-induced NF-kappaB activation and cell survival, whereas Ras was not required for either survival or NF-kappaB activation but was required for differentiation. IKK existed as a complex with PKC-iota, Src and IkappaB. Consistent with a role for Src in regulating NF-kappaB activation, an absence of Src activity impaired recruitment of PKC-iota into an IKK complex and markedly impaired NGF-induced translocation of p65/NF-kappaB to the nucleus. These findings reveal that in PC12 cells, aPKCs comprise a molecular switch to regulate differentiation and survival responses coupled downstream to NF-kappaB. On the basis of these findings, Src emerges as a critical upstream regulator of both PKC-iota and the NF-kappaB pathway.