Tumor cells can be induced to differentiate in vitro by biochemical manipulation of their culture environment. In the studies described here, the effects of medium conditioned by human retinal pigmented epithelial (RPE) cells on Y79 human retinoblastoma cells have been examined. RPE-conditioned medium in conjunction with laminin and a poly-D-lysine substratum is observed to induce neuronal differentiation of Y79 cells. The cells extend long cellular processes and exhibit immunologically detectable neurotypic properties. In contrast, control Y79 cells not exposed to medium conditioned by RPE cells exhibit only infrequent neuronal phenotypes. This response of Y79 cells to RPE-conditioned medium indicates that factors secreted by RPE cells can act as inducers of neuronal differentiation in retinoblastoma cells and suggest that such factors may be of importance in the development and differentiation of the neural retina.