The signaling capabilities and biological functions of activin receptor-like kinase 7 (ALK7), a type I receptor serine/threonine kinase predominantly expressed in the nervous system, are unknown. We have constructed a cell line derived from the rat pheochromocytoma PC12 in which expression of a constitutively active mutant of ALK7 (T194D) is under the control of a tetracycline-inducible promoter. For comparison, another cell line was engineered with tetracycline-regulated expression of a constitutively active variant of the transforming growth factor-beta type I receptor ALK5. Expression of activated ALK7 in PC12 cells resulted in activation of Smad2 and Smad3, but not Smad1, as well as the mitogen-activated protein kinases extracellular signal-regulated kinase and c-Jun N-terminal kinase. Reporter assays demonstrated that ALK7 activation stimulates transcription from the Smad-binding element of the Jun-B gene, the plasminogen activator inhibitor-1 gene, and AP-1 elements. In addition, ALK7 activation induced expression of endogenous gene products, including Smad7, c-fos mRNA, and plasminogen activator inhibitor-1. Thymidine incorporation assays revealed an anti-proliferative effect of ALK7 activation in PC12 cells, which correlated with increased transcription from the promoters of cycline-dependent kinase inhibitors p15(INK4B) and p21. Unexpectedly, ALK7 signaling produced a remarkable change in cell morphology characterized by cell flattening and elaboration of blunt, short cell processes. Interestingly, no such changes were observed upon induction of activated ALK5. The alterations in cell morphology upon ALK7 activation were more pronounced in cultures grown in full serum, were accompanied by rearrangements of actin filaments, and were maintained for several days after withdrawal of treatment. PC12 cultures that had been "primed" in this way showed an accelerated and augmented differentiation response to nerve growth factor. These results indicate that ALK7 may participate in the control of proliferation of neuronal precursors and morphological differentiation of postmitotic neurons.