Nerve growth factor (NGF) induces terminal differentiation in PC12, a pheochromocytoma-derived cell line. NGF binds a specific receptor on the membrane and triggers the ERK1/2 cascade, which stimulates the transcription of neural genes. We report that NGF significantly affects mitochondrial metabolism by reducing mitochondrial-produced reactive oxygen species and stabilizing the electrochemical gradient. This is accomplished by stimulation of mitochondrial manganese superoxide dismutase (MnSOD) both transcriptionally and post-transcriptionally via Ki-Ras and ERK1/2. Activation of MnSOD is essential for completion of neuronal differentiation because 1) expression of MnSOD induces the transcription of a neuronal specific promoter and neurite outgrowth, 2) silencing of endogenous MnSOD by small interfering RNA significantly reduces transcription induced by NGF, and 3) a Ki-Ras mutant in the polylysine stretch at the COOH terminus, unable to stimulate MnSOD, fails to induce complete differentiation. Overexpression of MnSOD restores differentiation in cells expressing this mutant. ERK1/2 is also downstream of MnSOD, as a SOD mimetic drug stimulates ERK1/2 with the same kinetics of NGF and silencing of MnSOD reduces NGF-induced late ERK1/2. Long term activation of ERK1/2 by NGF requires SOD activation, low levels of hydrogen peroxide, and the integrity of the microtubular cytoskeleton. Confocal immunofluorescence shows that NGF stimulates the formation of a complex containing membrane-bound Ki-Ras, microtubules, and mitochondria. We propose that active NGF receptor induces association of mitochondria with plasma membrane. Local activation of ERK1/2 by Ki-Ras stimulates mitochondrial SOD, which reduces reactive oxygen species and produces H(2)O(2). Low and spatially restricted levels of H(2)O(2) induce and maintain long term ERK1/2 activity and ultimately differentiation of PC12 cells.