Glial cell line-derived neurotrophic factor (GDNF) family ligands are target-derived trophic factors for several neuronal subpopulations. They promote survival and neurite outgrowth through binding to specific members of the GDNF family receptor alpha (GFR alpha) and subsequent activation of the RET tyrosine kinase receptor. Using compartmentalized cultures of sympathetic neurons, we have studied the mechanism of GDNF retrograde signaling. Our results demonstrate the presence of GDNF receptors RET and GFR alpha 1 in the two cellular compartments, cell bodies and distal axons. Addition of GDNF to either compartment initiated local signaling, including activation of RET and its downstream effectors AKT and ERK1/2. Addition of GDNF to distal axons induced a retrograde signal leading to neuronal survival and neurite outgrowth. Retrograde signaling was associated with retrograde transport of radiolabeled GDNF and GFR alpha 1, as well as activation of RET and AKT, but not of ERK1/2, in cell bodies. No anterograde signal propagation or transport was observed. Our results suggest a general mechanism for retrograde signaling initiated at distal axons through tyrosine kinase receptors.