We have investigated the role of brain-derived neurotrophic factor (BDNF) and neurotrophin-3 (NT-3) in the regulation of cell proliferation in the early developing cochleovestibular ganglion (CVG). Ganglia were isolated from 72-hr chick embryos and cultured for 24 hr. Both BDNF and NT-3 had a powerful mitogenic effect, at doses of 1-5 ng/ml, consistent with an involvement of the high-affinity receptor. Evidence for the participation of the glycosyl-phosphatidylinositol (GPI)/inositol phosphoglycan (IPG) signaling system in the mediation of proliferative effects of BDNF and NT-3 is presented. Both of these neurotrophins elicited a fast and transient hydrolysis of labeled GPI, approximately 60% in 30 sec. The dose-response profile of GPI hydrolysis overlaps the neurotrophin-induced cell proliferation response profile. Anti-IPG antibodies were able to block the growth-promoting effects of BDNF and NT-3. Anti-IPG antibodies immunoprecipitated a CVG-endogenous IPG, induced upon BDNF treatment, which exhibited proliferative stimulating properties. Both BDNF and NT-3 are proposed as potential candidates for regulation of growth during CVG development, with this mitogenic effect being mediated by the GPI/IPG signaling system.