Certain biological actions of phorbol esters cannot be duplicated by diacylglycerol (DAG). Thus, the human neuroblastoma cell line SH‐SY5Y differentiates when exposed to 12‐tetradecanoyl‐13‐acetyl‐β‐phorbol (TPA) and protein kinase C (PKC) inhibitors, but not when exposed to DAG. To investigate the specific features of the phorbol diester molecule that might be responsible for these effects, we examined the extension of neurites, expression of neuron‐specific enolase, and appearance and localization of phosphorylated high molecular weight neurofilament subunits (NF‐H). TPA, 12‐deoxy‐13‐tetradecanoyl‐β‐phorbol, and staurosporine, but not DAG or 4‐O‐methyl‐TPA, caused neurite outgrowth. Neuron‐specific enolase was expressed in cells treated with TPA and 12‐deoxy‐13‐tetradecanoyl‐β‐phorbol but not with DAG, staurosporine, or 4‐O‐methyl‐TPA. NF‐H increased in the perikarya of cells treated with DAG and 4‐O‐methyl‐TPA, in processes and to varying degrees in perikarya of TPA‐ and 12‐deoxy‐13‐tetradecanoyl‐β‐phorbol‐treated cells, but much more in the processes than in the perikarya of staurosporine‐differentiated cells. These findings and additional differences between the differentiation induced by TPA (a PKC activator) and staurosporine (a PKC inhibitor), including distinct morphology of the cell body and processes and time of appearance of the morphological phenotype, suggest that activators and inhibitors of PKC induce differentiation of SH‐SY5Y cells by different mechanisms, and that the five‐membered/seven‐membered terpene ring region present in TPA must be intact for the induction of morphological differentiation.