The neuropeptide pituitary adenylyl cyclase-activating peptide (PACAP) and one of its receptors (PAC₁) are expressed in embryonic neural tube, where they appear to regulate neurogenesis and patterning. We now show that PAC₁ gene expression is also present in neonatal rats in the ventricular and subventricular zones and in the optic chiasm, areas that are rich in oligodendrocyte (OL) progenitors (OLP). Because actions of PACAP on OLP have not been reported, we examined the effects of PACAP on the proliferation of purified OLP in culture and on myelinogenesis in cerebellar slices. Northern analyses on total RNA from purified glial cell subtypes revealed an abundant 7 kb hybridizing transcript in OLP, which was confirmed to correspond to the PAC₁ receptor by reverse transcription-PCR. The presence of this receptor was also corroborated by radioligand binding and cAMP assay. In cultured OL, receptor density decreased during maturation but was partially counterbalanced by the appearance of sites that bound both PACAP and the related peptide vasoactive intestinal peptide. PACAP increased DNA synthesis in OLP cultures almost twofold and increased the bromodeoxyuridine-labeling index in O4-positive OLP. PACAP treatment also resulted in decreased sulfate incorporation into sulfatide in cultures of differentiating OL. The PACAP effect on sulfatide synthesis was fully reproduced in a cerebellar explant model. These findings indicate that PACAP may act at two stages during OL development to (1) stimulate proliferation and (2) delay maturation and/or myelinogenesis.