One of the key morphological changes associated with the nerve growth factor (NGF)-induced differentiation of rat adrenal pheochromocytoma (PC-12) cells is the growth of axon-like processes called neurites. A growing body of evidence suggests that this process may be dependent upon plasmin, a serine protease generated from plasminogen (Plg) by either urokinase Plg activator (u-PA) or tissue Plg activator (t-PA). Prior work in our laboratory has identified annexin II (Ann-II) as a co-receptor for Plg and t-PA that promotes and localizes plasmin generation near the cell surface. In the present study, we report a 3-9-fold increase in Ann-II protein and message levels in NGF-treated PC-12 cells. Message stability and nuclear run-on assays suggest that this induction occurs at the level of gene transcription. Neurite outgrowth assays on and within a three-dimensional matrix demonstrate the inhibition of NGF-induced PC-12 cell differentiation by polyclonal and monoclonal antibodies directed against Ann-II as well as by the overexpression of antisense Ann-II mRNA. Neuritogenesis is also impaired by alpha(2)-plasmin inhibitor, antibodies directed against t-PA and u-PA, and epsilon-aminocaproic acid, a lysine analog that inhibits Plg activation and the binding of Plg to Ann-II. Plasmin generation assays reveal a 2-fold increase in plasmin production on NGF-treated PC-12 cells, which can be blocked by a polyclonal antibody directed against the tail region of Ann-II. From these data, we conclude that Ann-II is transcriptionally up-regulated by NGF and that Ann-II-mediated plasmin generation may play an important role during neurite development in the differentiating PC-12 cell.