Cell-cell contact appears to play a critical role in the expression of transmitter traits in developing neurons. We have previously shown that cell membrane contact induced the de novo appearance of choline acetyltransferase (CAT) in virtually pure cultures of dissociated sympathetic neurons. A membrane-associated CAT-inducing factor has been extracted and purified 5000-fold. This factor exerts differential effects on transmitter traits in cultured sympathetic neurons. After 3 days in vitro, neurons exposed to the factor contained 40-fold higher levels of the neuropeptide substance P than controls. Somatostatin exhibited a similar dramatic elevation. In contrast, the factor had no effect on leucine-enkephalin. Further, the specific activity of tyrosine hydroxylase was reduced to 5% of control activity in treated cultures. These effects occurred in the absence of any increases in cell number. Thus, it appears that cell contact via membrane-associated factors may exert differential effects on phenotypic expression.