The amyloid precursor protein (APP) is a molecule centrally involved in Alzheimer disease pathology, but whose normal function is still poorly understood. To investigate the consequences of increased intracellular production of various regions of APP on cellular physiology, we stably transfected PC12 cells with the C-terminal 100 amino acids of the human APP. In eight transfected clones that express the APP(C100) protein, exposure to nerve growth factor (NGF) did not promote differentiation. Transfectants continued to divide and failed to elaborate extensive neurites, whereas control PC12 cells, mock-transfected PC12 cells, and a nonexpressing transfected cell line did develop neurites and stopped dividing after NGF stimulation. Unlike NGF treatment, treatment with basic fibroblast growth factor profoundly accelerated neurite outgrowth in transfected cells. Also, a dramatic increase in a tyrosine phosphatase activity was noted. Expression and accumulation of APP C100 protein in PC12 cells results in an abnormal response to growth factor stimulation.