We have investigated the role of glial cell-line derived neurotrophic factor (GDNF) and the effect of soluble or immobilized localization of its GDNF family receptor α1 (GFRα1) on neurite growth in cultured embryonic Bax−/− dorsal root ganglion neurons, which survive in the absence of trophic support. Whereas GDNF alone has a moderate effect on neurite growth, soluble and immobilized GFRα1 elicit opposing and GDNF-independent effects on neurite growth by a phospholipase C (PLC) γ-dependent mechanism. Thus, GFRα1 elicits nerve growth responses independent of GDNF. However, GDNF in the presence of soluble or immobilized GFRα1 reverse the GDNF-independent GFRα1 modulation of neurite growth. The different outcome of soluble and bound GFRα1 combined with our previous immunohistochemical data showing GFRα1-protein in Schwann cells but not axons suggest terminal Schwann cells as a source of locally administered target-derived GFRα1 and place this receptor in the path of axonal growth and guidance. Thus, target-derived GFRα1 play opposing roles when presented alone and with GDNF and, therefore, can function as a nerve growth cue that both can promote and prevent growth in the developing peripheral nervous system. Developmental Dynamics 227:27–34, 2003 © 2003 Wiley-Liss, Inc.