Cultured pigment epithelial cells of the fetal human retina secrete a protein, pigment epithelium-derived factor (PEDF), that induces a neuronal phenotype in cultured human retinoblastoma cells. Morphological changes include the induction of an extensive neurite meshwork and the establishment of corona-like cellular aggregates surrounding a central lumen. The differentiated cells also show increases in the expression of neuron-specific enolase and the 200-kDa neurofilament subunit. Amino acid and DNA sequence data demonstrate that PEDF belongs to the serine protease inhibitor (serpin) family. The PEDF gene contains a typical signalpeptide sequence, initiator methionine codon, and polyadenylylation signal and matches the size of other members of the serpin superfamily (e.g., a1-antitrypsin). It lacks homology, however, at the putative serpin reactive center. Thus, PEDF could exert a paracrine effect in the embryonic retina, influencing neuronal differentiation by a mechanism that does not involve classic inhibition of serine protease activity.The retinal pigment epithelium (RPE) develops in advance of and lies adjacent to the neural retina. A closed compartment between the two cell layers contains the interphotoreceptor matrix and many soluble secretory products of RPE and neural retinal cells. In the human, the interphotoreceptor matrix is present by 20 weeks of gestation and contains at least one specific marker, the interphotoreceptor retinoidbinding protein (1). Nutrients, metabolites, or trophic factors exchanged between the RPE and neural retina must pass through the interphotoreceptor matrix. RPE cells, for example, are thought to synthesize and secrete a photoreceptor survival-promoting factor, PSPA (2). Cultured RPE cells also synthesize a number of other, well-known trophic factors including PDGF (3), FGF (4), TGF-a (5), and TGF-13 (6). It is thus possible that these or other, unknown factors derived from the RPE could influence neural retina development.We Cell Culture. The Y79 retinoblastoma cell line (American Type Culture Collection) was maintained in suspension culture (7). Cells were harvested by centrifugation for 5 min at 600 x g, washed in prewarmed serum-free medium, centrifuged again, and suspended at 106 cells per ml in serum-free medium with or without HPLC-purified PEDF (50-500 ng/ ml) (9) for a 7-day incubation period prior to attachment to poly(D-lysine)-coated flasks (8). A number of growth factors were tested under similar conditions: NGF at 10-300 ng/ml, PDGF at 1-5 ng/ml, TGF-a at 5 ng/ml, TGF-f3 at 5 ng/ml, FGF at 25-220 ng/ml, and EGF at 25-100 ng/ml (11).Cell Analyses.