Neuronal membrane components that bind alpha-bungarotoxin with high affinity have only recently been shown unambiguously to function as nicotinic receptors. Activation of the receptors increases intracellular levels of free calcium in neurons. In the chick ciliary ganglion, where the receptors have been studied in some detail, they have been shown to have a predominantly nonsynaptic location on neurons and may be concentrated on pseudodendrites emerging from the somata. This has raised questions about the physiological significance of the receptors for the neurons. Here we show that activation of the receptors on isolated ciliary ganglion neurons in cell culture produces neurite retraction. Focal application of either nicotine or ACh at low concentrations induces the retraction, and alpha-bungarotoxin blocks the effect. The retraction requires external calcium and is confined to the individual neurite stimulated with agonist. Brief exposure to elevated concentrations of K+ also induces neurite retraction, and both the K(+)-induced and the nicotine-induced retractions can be prevented by the calcium channel blocker omega-conotoxin. The results suggest that activation of the alpha-bungarotoxin-binding nicotinic receptors on neurites triggers activation of voltage-gated calcium channels presumably by depolarizing the membrane, and that together they permit sufficient calcium to enter the neurite to prevent further outgrowth and induce retraction.