Picomolar concentrations of purified amyloid precursor protein (APP) potentiate the neurotrophic activity of suboptimal concentrations of NGF on PC12 cells. To understand the molecular basis for this potentiation, we have characterized the signal transduction pathway used by APP for its neurotrophic activity. APP stimulated the tyrosine phosphorylation of a number of proteins including insulin receptor substrate-1 (IRS-1). Incubation of naive cells with antisense oligonucleotides to IRS-1 mRNA resulted in a dramatic reduction of IRS-1 levels and inhibition of APP stimulated neurite outgrowth. Phosphotidylinositol 3-kinase became associated with IRS-1 and activated upon APP stimulation. Extracellular signal-regulated kinase (ERK 1 and ERK 2) phosphorylation was detected by both immunoblot analysis and immunocytochemistry using antibodies directed to their phosphorylated (and hence, activated) form. There was also an elevation of ERK kinase activity. The potentiation of NGF activity was reflected in a correspondingly synergistic elevation of tyrosine phosphorylated ERK. The pattern of signal transduction targets indicates that APP potentiated the neurotrophic effects of NGF via the activation of the IRS-1 signaling pathway.