Pigment epithelium-derived factor is a protein synthesised by retinal pigment epithelial cells and secreted into the retinal interphotoreceptor matrix. The protein can be purified from culture medium conditioned by retinal pigment epithelial cells or from washes of the interphotoreceptor matrix space. When pigment epithelium-derived factor is added to culture medium of human Y-79 retinoblastoma cells, it induces the cells to elaborate a dense meshwork of neurites and to increase their expression of specific biochemical markers of neuronal differentiation. When pigment epithelium-derived factor is added to culture medium of rat cerebellar granule cells in primary culture, the lifetime of the cells is markedly extended. Thus, this protein is a neurotrophic protein in that it acts as both a differentiating agent and a survival factor to neurons. These properties make pigment epithelium-derived factor an excellent candidate for use in clinical transplantation studies, in the neural retina, and other areas of the central nervous system as well as in the treatment of neurodegenerative diseases such as retinitis pigmentosa.