Myelin inhibitors activate a p75(NTR)-dependent signaling cascade in neurons that not only inhibits axonal growth but also prevents neurotrophins (NT) from stimulating growth. Most intriguingly, in addition to Trk receptors, neurotrophins also bind to p75(NTR). We have designed a "mini-neurotrophin" called BAG to activate TrkB in the absence of p75(NTR) binding. We find that BAG is as effective as the natural TrkB ligands (brain-derived neurotrophic factor (BDNF) and NT-4) at promoting neurite outgrowth from cerebellar neurons. Furthermore, the neurite outgrowth responses stimulated by BDNF and BAG are inhibited by a common set of reagents, including the Trk receptor inhibitor K252a, as well as protein kinase A and phosphoinositide 3-kinase inhibitors. However, in contrast to BDNF, BAG promotes growth in the presence of a myelin inhibitor or when antibodies directly activate the p75NTR inhibitory pathway. On the basis of this observation, we postulated that the binding of BDNF to the p75(NTR) might compromise the ability of BDNF to stimulate neurite outgrowth in an inhibitory environment. To test this, we used NGF, and an NGF-derived peptide, to compete for the BDNF/ p75(NTR) interaction; remarkably, in the presence of either agent, BDNF acquired the ability to promote neurite outgrowth in the presence of a myelin inhibitor. The data suggest that in an inhibitory environment, the BDNF/p75(NTR) interaction compromises regeneration. Agents that activate Trk receptors in the absence of p75(NTR) binding, or agents that inhibit neurotrophin/ p75(NTR) binding, might therefore be better therapeutic candidates than neurotrophins.