While the neurotrophin receptor p75^NTR is expressed by many developing neurons, its function in cells escaping elimination by programmed cell death remains unclear. The lack of intrinsic enzymatic activity of p75^NTR prompted a search for protein interactors expressed in the developing retina, which resulted in the identification of the GTPase RhoA. In transfected cells, p75^NTR activated RhoA, and neurotrophin binding abolished RhoA activation. In cultured neurons, inactivation of Rho proteins mimicked the effect of neurotrophins by increasing the rate of neurite elongation. In vivo, axonal outgrowth was retarded in mice carrying a mutation in the p75^NTR gene. These results indicate that p75^NTR modulates in a ligand-dependent fashion the activity of intracellular proteins known to regulate actin assembly.