Since the biological role of phospholipase C (PLC) gamma1 in neuronal differentiation still barely understood, here, we report that overexpression of PLC gamma1 inhibits neurite outgrowth and prolonged proliferation ability of PLC gamma1 contribute to the alteration of cell cycle regulatory proteins, subsequently exiting from cell growth arrest. Deletion of the SH3 or the entire SH223 domains, but not deletion of the N-SH2 or both the N-SH2 and C-SH2 domains expressing cells abolishes the differentiation-inhibitory effects of PLC gamma1, displaying depression of PCNA and elevation of cyclin D1. Moreover, these cells declined CDK1 and CDK2 expression and increased p21WAF-1, accompanying with G2/M accumulation. Some antiproliferative reagents are able to restore neurite outgrowth in PLC gamma1 cells, showing G2/M arrest. Our findings suggest that the proliferation activity of PLC gamma1 via its SH3 domain may be coupled with the flight from growth arrest by NGF, thereby inhibiting neuronal differentiation.