Neurite outgrowth from cells of neuroepithelial origin is under the reciprocal control of thrombin and the thrombin inhibitor - glia-derived nexin (GDN). The neurite retraction activity of thrombin is blocked when GDN complexes with the enzyme and inhibits its proteolytic activity. However, we have previously shown that enzymically inactive proenzyme is also capable of inducing neurite retraction. We present evidence here to show that GDN does not bind to prothrombin in solution. When a mixture of prothrombin and GDN is subjected to either polyacrylamide gel electrophoresis or immunoprecipitation, a stable complex cannot be detected. This is in direct contrast to thrombin, which exhibits stable complexes with GDN under both conditions. At the cell surface, however, GDN is able to inhibit the biological activity of prothrombin. When a mixture of proenzyme and inhibitor is applied to previously differentiated transformed retinoblasts (Adl2 HER10), the ability of prothrombin to induce neurite retraction is blocked. Furthermore, following 1 h exposure to Ad12 HER1O cells, a solution of prothrombin was found to contain half the potential enzyme activity as detected by chromogenic assay. These results have been interpreted as evidence for the ability of neuronal cells to cleave prothrombin and subsequently release activated enzyme.