Coculture of adult pituitary intermediate lobe (IL) cells, a target for hypothalamic dopaminergic neurons, with fetal rat hypothalamic cells accelerate differentiation of dopaminergic neurons. This involves long range diffusible as well as additional factors which may be membrane-bound. To determine whether IL membrane-bound factors contribute to the differentiating effect of IL cells, IL membranes were added to dispersed fetal hypothalamic neurons. This stimulated the outgrowth of dopaminergic neurites and elevated TH levels. Limited trypsin proteolysis of IL cell surface abolished the effect on TH levels. Addition of adenohypophyseal membranes was ineffective. Joint treatment with IL membranes, and medium conditioned (CM) over IL cells, produced the same effect on TH levels as did coculture with the same number of IL cells. The results demonstrate that IL cells express on their surface a membrane-bound factor promoting differentiation of fetal dopaminergic neurons in vitro; this factor acts in addition to diffusible activities.