Retinoic acid (RA) and nitric oxide (NO) are known to promote neuronal development in both vertebrates and invertebrates. Retinoic acid receptors appear to be present in cnidarians and NO plays various physiological roles in several cnidarians, but there is as yet no evidence that these agents have a role in neural development in this basal metazoan phylum. We used primary cultures of cells from the sea pansy Renilla koellikeri to investigate the involvement of these signaling molecules in cnidarian cell differentiation. We found that 9-cis RA induce cell proliferation in dose- and time-dependent manners in dishes coated with polylysine from the onset of culture. Cells in cultures exposed to RA in dishes devoid of polylysine were observed to differentiate into epithelium-associated cells, including sensory cells, without net gain in cell density. NO donors also induce cell proliferation in polylysine-coated dishes, but induce neuronal differentiation and neurite outgrowth in uncoated dishes. No other cell type undergoes differentiation in the presence of NO. These observations suggest that in the sea pansy (1) cell adhesion promotes proliferation without morphogenesis and this proliferation is modulated positively by 9-cis RA and NO, (2) 9-cis RA and NO differentially induce neuronal differentiation in nonadherent cells while repressing proliferation, and (3) the involvement of RA and NO in neuronal differentiation appeared early during the evolutionary emergence of nervous systems.