Glial cell line-derived neurotrophic factor (GDNF) is a potent survival factor for midbrain dopaminergic neurons. To begin to understand the intracellular signaling pathways used by GDNF, we investigated the role of phosphatidylinositol 3-kinase activity in GDNF-stimulated cellular function and differentiation of dopaminergic neurons. We found that treatment of dopaminergic neuron cultures with 10 ng/ml GDNF induced maximal levels of Ret phosphorylation and produced a profound increase in phosphatidylinositol 3-kinase activity, as measured by western blot analysis and lipid kinase assays. Treatment with 1 μM 2-(4-morpholinyl)-8-phenylchromone (LY294002) or 100 nM wortmannin, two distinct and potent inhibitors of phosphatidylinositol 3-kinase activity, completely inhibited GDNF-induced phosphatidylinositol 3-kinase activation, but did not affect Ret phosphorylation. Furthermore, we examined specific biological functions of dopaminergic neurons: dopamine uptake activity and morphological differentiation of tyrosine hydroxylase-immunoreactive neurons. GDNF significantly increased dopamine uptake activity and promoted robust morphological differentiation. Treatment with LY294002 completely abolished the GDNF-induced increases of dopamine uptake and morphological differentiation of tyrosine hydroxylase-immunoreactive neurons. Our findings show that GDNF-induced differentiation of dopaminergic neurons requires phosphatidylinositol 3-kinase activation.