To determine the functions of the alpha1 and beta1 thyroid hormone receptors (TRs) in neural differentiation, we have established stable transfected neuronal cell lines (Neuro-2a) that overexpress either TRalpha1 or TRbeta1. 3,5,3'-Triiodothyronine (T3) treatment of cells that overexpress TRbeta1 blocks proliferation by an arrest of cells in G0/G1 and induces morphological and functional differentiation of Neuro-2a cells as indicated by the marked increase in the number of perisomatal filopodia-like neurites and in acetylcholinesterase (AChE) activity. The effect on AChE activity was dose-dependent, and the time-course analysis reveals that this effect occurs after 24 hr of T3 treatment, with a maximal increase occurring after 48 hr of treatment. The increase of AChE activity is paralleled by an increase of AChE mRNAs. Last, we present evidence that shows that the effects of T3 on differentiation are independent of its effect on proliferation. T3 had no effect on the differentiation of Neuro-2a cells that overexpressed TRalpha1. Our results indicate that TRbeta1 may play a kev role in the effects of T3 in neuroblastoma cell differentiation.