This report examines cAMP-induced regulation of directed organelle transport in bag cell neuron growth cones using video-enhanced differential interference contrast (DIC) microscopy (Allen et al., 1981; Inoue, 1981) and digital image analysis techniques. Under control conditions, organelle transport is evident in the central cytoplasmic regions of bag cell neuron growth cones, but not in lamellae. Motility of lamellae takes the form of slow (less than 0.01 micron/sec) extension of margins and ruffling motions that propagate as waves (velocity, approximately 0.07 micron/sec) in a retrograde direction. Application of forskolin and a phosphodiesterase (PDE) inhibitor at concentrations known to induce changes in bag cell protein phosphorylation resulted in (1) rapid extension of directed organelle transport into lamellae, and (2) inhibition of the retrograde ruffling waves. These changes effected transformation of lamellae into neurite endings packed with microtubules and organelles, a large proportion of which appeared to be neurosecretory granules. The effects were reversible, dose-dependent, potentiated by a variety of PDE inhibitors, and mimicked by 6-N-butyl-8-benzyl-thio-cAMP (BT-cAMP). Though forskolin may normally promote depolarization and Ca entry, these changes in growth cone structure are not secondary to influx of external Ca, as they persist in Ca-free/EGTA solutions; furthermore, they do not resemble the effects of depolarization induced by perfusion with elevated K solutions. The cAMP-induced changes in growth cone morphology that we report here suggest a possible role for protein phosphorylation in promoting growth cone differentiation and structural changes accompanying secretion.