Neural development is controlled by region-specific factors that regulate cell proliferation, migration and differentiation. Pituitary adenylate cyclase-activating polypeptide (PACAP) is a neuropeptide that exerts a wide range of effects on different cell types in the brain as early as the fetal stage. Here we review current knowledge concerning several aspects of PACAP expression in embryonic and neonatal neural tissue: (i) the distribution of PACAP and PACAP receptors mRNA in the developing brain; (ii) the characteristic generation of neurons, astrocytes and oligodendrocytes in brain areas where the PACAP receptor is expressed and (iii) the role of PACAP as a regulator of neural development, inducing differentiation and proliferation in association with other trophic factors or signal transduction molecules.