Neuronal differentiation involves Rac and Cdc42 GTPases. α-Chimaerin, a Rac/Cdc42 regulator, occurs as α1- and alternatively spliced Src homology 2 (SH2) domain-containing α2-isoforms. α2-chimaerin mRNA was highly expressed in the rat embryonic nervous system, especially in early postmitotic neurons. α1-chimaerin mRNA was undetectable before embryonic day 16.5. Adult α2-chimaerin mRNA was restricted to neurons within specific brain regions, with highest expression in the entorhinal cortex. α2-chimaerin protein localized to neuronal perikarya, dendrites, and axons. The overall pattern of α2-chimaerin mRNA expression resembles that of cyclin-dependent kinase regulator p35 (CDK5/p35) which participates in neuronal differentiation and with which chimaerin interacts. To determine whether α2-chimaerin may have a role in neuronal differentiation and the relevance of the SH2 domain, the morphological effects of both chimaerin isoforms were investigated in N1E-115 neuroblastoma cells. When plated on poly-lysine, transient α2-chimaerin but not α1-chimaerin transfectants formed neurites. Permanent α2-chimaerin transfectants generated neurites whether or not they were stimulated by serum starvation, and many cells were enlarged. Permanent α1-chimaerin transfectants displayed numerous microspikes and contained F-actin clusters, a Cdc42-phenotype, but generated few neurites. In neuroblastoma cells, α2-chimaerin was predominantly soluble with some being membrane-associated, whereas α1-chimaerin was absent from the cytosol, being membrane- and cytoskeleton-associated, paralleling their subcellular distribution in brain. Transient transfection with α2-chimaerin mutated in the SH2 domain (N94H) generated an α1-chimaerin-like phenotype, protein partitioned in the particulate fraction, and in NGF-stimulated pheochromocytoma cell line 12 (PC12) cells, neurite formation was inhibited. These results indicate a role for α2-chimaerin in morphological differentiation for which its SH2 domain is vital.