Transplantation of retinal pigment epithelial (RPE) cells in the basal ganglia could provide a novel cell-based therapy for Parkinson's disease by providing a constant source of dopamine replacement via the melanin synthetic pathway enzyme tyrosinase. We now demonstrate that human RPE cells also produce a neurotrophic effect on primary cultures of rat striatal (enkephalinergic) and mesencephalic (dopaminergic) neurons. Differentiation of RPE cells to a pigmented monolayer using a Ca(++)-switch protocol increased the potency of the neurotrophic effect on dopaminergic neurons. Conditioned medium derived from differentiated RPE cells increased neurite outgrowth in dopaminergic neurons by 125% compared to 25% for undifferentiated RPE cells. The neurotrophic effect was not due to tyrosinase activity. Differentiation of RPE cells doubled the production of pigment-derived epithelial factor (PEDF). However, PEDF accounted for only a portion of the neurotrophic effect as determined by depletion experiments and dose-response comparisons with purified PEDF, indicating that differentiation increased the production of other trophic factors as well. Conditioned medium from differentiated RPE cells also provided a neurotrophic effect on a subset of enkephalinergic striatal neurons increasing neurite outgrowth by 78%. Survival of enkephalinergic neurons in vitro was increased by RPE conditioned medium. In untreated cultures the number of enkephalinergic neurons declined 62% over a 2-week period compared to a 29% decline in RPE-treated cultures. These results indicate that transplantation RPE cells could potentially provide a dual benefit in Parkinson's disease producing both dopamine and neurotrophic support of the basal ganglia.