Ciliary neurotrophic factor (CNTF) exhibits multiple biological effects during vertebrate retinogenesis, including regulation of photoreceptor cell differentiation. In the early postnatal mouse retina, CNTF induces rapid and transient phosphorylation of signal transducer and activator of transcription (STAT) 1 and STAT3 and the extracellular signal-regulated kinase (ERK). Although both proliferating progenitor cells and postmitotic neurons respond directly to cytokine signals, CNTF elicits distinct phosphorylation patterns of STAT3 and ERK. CNTF stimulation induces low levels of STAT3 phosphorylation in progenitors and differentiated neurons but a robust STAT3 activation among postmitotic photoreceptor precursors expressing the cone-rod homeobox gene Crx and newly differentiated rod photoreceptors. In contrast, CNTF causes preferential phosphorylation of ERK in progenitor cells and photoreceptor precursors. Inhibition of the cytokine receptor gp130 using neutralizing antibodies reveals that gp130 is required for both CNTF-induced STAT3 and ERK phosphorylation. Perturbation of STAT signaling by a STAT inhibitor peptide or a dominant-negative STAT3 mutant causes enhanced production of rod photoreceptors in the absence of exogenous cytokines, whereas inhibiting ERK activation by a MEK (mitogen-activated protein kinase kinase)-specific inhibitor has no effect on rod photoreceptor differentiation in vitro. Furthermore, disrupting the function of epidermal growth factor (EGF) receptors, which modulate rod development in vivo, indicates that the EGF family of ligands does not mediate the inhibitory effect of cytokine on rod differentiation. These results demonstrate that cytokine signal transduction is dynamic and heterogeneous in the developing retina, and that endogenous ligand-induced STAT activation in retinal progenitor and/or photoreceptor precursor cells plays an important role in regulating photoreceptor development.