Extracellular proteolysis is considered to be required during neuritic outgrowth to control the adhesiveness between the growing neurite membrane and extracellular matrix proteins. In this work, PC12 nerve cells were used to study the modulation of proteolytic activity during neuronal differentiation. PC12 cells were found to contain and release a 70–75‐kDa tissue‐type plasminogen activator (tPA) and a much less abundant 48‐kDa urokinase‐type plasminogen activator. A plasminogen activator inhibitor (PAI) activity with molecular sizes of 54 and 58 kDa was also detected in PC12 cell conditioned medium and formed high‐molecular‐mass complexes with released tPA. Release of PAI activity was dependent on treatment with nerve growth factor (NGF), whereas tPA synthesis and release were under control of a cyclic AMP‐ dependent mechanism and increased on treatment with dibutyryl‐cyclic AMP [(But)₂cAMP] or cholera toxin. Simultaneous treatment with NGF and (But)₂cAMP resulted in increases of both tPA and PAI release and enhancement of tPA‐PAI complex formation. The resulting plasminogen activator activity in conditioned medium was high in (But)₂cAMP‐treated cultures with short neuritic outgrowth but remained low in NGF‐ or NGF plus (But)₂ cAMP‐treated cultures, where neurite extension was, respectively, large and very large. These results suggest that excess proteolytic activity may be detrimental to neuritic outgrowth and that not only PAI release but also tPA‐PAI complex formation is associated with production of large and stable neuritic outgrowth. This can be understood as an involvement of PAI in the protection against neurite‐destabilizing proteolytic activity.