Astrocytes have been shown to release factors that have promoting or inhibiting effects on neuronal development. However, mechanisms controlling the release of such factors from astrocytes are not well established. Astrocytes express muscarinic receptors whose activation stimulates a robust intracellular signaling, although the role of these receptors in glial cells is not well understood. Acetylcholine and acetylcholine receptors are present in the brain before synaptogenesis occurs and are believed to be involved in neuronal maturation. The present study was undertaken to investigate whether stimulation of muscarinic receptors in astrocytes would modulate neurite outgrowth in hippocampal neurons. Rat hippocampal neurons, cocultured with rat cortical astrocytes previously exposed to the cholinergic agonist carbachol, displayed longer neurites. The effect of carbachol in astrocytes was due to the activation of M3 muscarinic receptors. Exposure of astrocytes to carbachol increased the expression of the extracellular matrix proteins fibronectin and laminin-1 in these cells. This effect was mediated in part by an increase in laminin-1 and fibronectin mRNA levels and in part by the up-regulation of the production and release of plasminogen activator inhibitor-1, an inhibitor of the proteolytic degradation of the extracellular matrix. The inhibition of fibronectin activity strongly reduced the effect of carbachol on the elongation of all the neurites, whereas inhibition of laminin-1 activity reduced the elongation of minor neurites only. Plasminogen activator inhibitor-1 also induced neurite elongation through a direct effect on neurons. Taken together, these results demonstrate that cholinergic muscarinic stimulation of astrocytes induces the release of permissive factors that accelerate neuronal development.