In response to injury and inflammation of the CNS, brain cells including microglia and astrocytes secrete tumor necrosis factor-α (TNF). This pro-inflammatory cytokine has been implicated in both neuronal cell death and survival. We now provide evidence that TNF affects the formation of neurites. Neurons cultured on astrocytic glial cells exhibited reduced outgrowth and branching of neurites after addition of recombinant TNF or prestimulation of glial cells to secrete TNF. This effect was absent in neurons of TNF receptor-deficient mice cultured on prestimulated glia of wild-type mice and was reverted by blocking TNF with soluble TNF receptor IgG fusion protein. TNF activated in neurons the small GTPase RhoA. By inactivating Rho with C3 transferase, the inhibitory effect of TNF on neurite outgrowth and branching was abolished. These results suggest that glia-derived TNF, as part of an injury or inflammatory process, can inhibit neurite elongation and branching during development and regeneration.