GLIAL-CELL-LINE-DERIVED neurotrophic factor (GDNF)¹ is a potent survival factor for central and peripheral neurons^2–6, and is essential for the development of kidneys and the enteric nervous system^7–9. Despite the potential clinical and physiological importance of GDNF, its mechanism of action is unknown. Here we show that physiological responses to GDNF require the presence of a novel glycosyl-phosphatidylinositol (GPI)-linked protein (designated GDNFR-α) that is expressed on GDNF-responsive cells and binds GDNF with a high affinity. We further demonstrate that GDNF promotes the formation of a physical complex between GDNFR-α and the orphan tyrosine kinase receptor Ret^10–12, thereby inducing its tyrosine phosphorylation. These findings support the hypothesis that GDNF uses a multi-subunit receptor system in which GDNFR-α and Ret function as the ligand-binding and signalling components, respectively.