We have previously shown that protein kinase C⑀ (PKC⑀) induces neurite outgrowth via its regulatory domain and independently of its kinase activity. This study aimed at identifying mechanisms regulating PKC⑀-mediated neurite induction. We show an increased association of PKC⑀ to the cytoskeleton during neuronal differentiation. Furthermore, neurite induction by overexpression of full-length PKC⑀ is suppressed if serum is removed from the cultures or if an actin-binding site is deleted from the protein. A peptide corresponding to the PKC⑀ actin-binding site suppresses neurite outgrowth during neuronal differentiation and outgrowth elicited by PKC⑀ overexpression. Neither serum removal, deletion of the actin-binding site, nor introduction of the peptide affects neurite induction by the isolated regulatory domain. Membrane targeting by myristoylation renders full-length PKC⑀ independent of both serum and the actin-binding site, and PKC⑀ colocalized with F-actin at the cortical cytoskeleton during neurite outgrowth. These results demonstrate that the actin-binding site is of importance for signals acting on PKC⑀ in a pathway leading to neurite outgrowth. Localization of PKC⑀ to the plasma membrane and/or the cortical cytoskeleton is conceivably important for its effect on neurite outgrowth.