Neurotrophins regulate survival, axonal growth, and target innervation of sensory and other neurons. Neurotrophin-3 (NT-3) is expressed specifically in cells adjacent to extending axons of dorsal root ganglia neurons, and its absence results in loss of most of these neurons before their axons reach their targets. However, axons are not required for NT-3 expression in limbs; instead, local signals from ectoderm induce NT-3 expression in adjacent mesenchyme. Wnt factors expressed in limb ectoderm induce NT-3 in the underlying mesenchyme. Thus, epithelial-mesenchymal interactions mediated by Wnt factors control NT-3 expression and may regulate axonal growth and guidance.