Protein tyrosine phosphatase mu (PTPmu) is an adhesion molecule in the immunoglobulin superfamily and is expressed in the developing nervous system. We have shown that PTPmu can promote neurite outgrowth of retinal ganglion cells and it regulates neurite outgrowth mediated by N-cadherin (S. M. Burden-Gulley and S. M. Brady-Kalnay, 1999, J. Cell Biol. 144,1323-1336). We previously demonstrated that PTPmu binds to the scaffolding protein RACK1 in yeast and mammalian cells (T. Mourton et al., 2001, J. Biol. Chem. 276,14896-14901). RACK1 is a receptor for activated protein kinase C (PKC). In this article, we demonstrate that PKC is involved in PTPmu-dependent signaling. PTPmu, RACK1, and PKCdelta exist in a complex in cultured retinal cells and retinal tissue. Using pharmacologic inhibition of PKC, we demonstrate that PKCdelta is required for neurite outgrowth of retinal ganglion cells on a PTPmu substrate. These results suggest that PTPmu signaling via RACK1 requires PKCdelta activity to promote neurite outgrowth.