Lysophosphatidic acid is a growth factor-like signalling phospholipid. We demonstrate here that lysophosphatidic acid induces process retraction in central glia-4 cells and oligodendrocyte precursors. This lysophosphatidic acid effect is rapid and concentration-dependent and results in cell rounding. It is inhibited by pre-treatment of cells with C3 exoenzyme, a specific inhibitor of Rho, or with Y-27632, a specific inhibitor of ROCK, a downstream kinase of Rho. Processes of differentiated central glia-4 oligodendrocytes were insensitive to lysophosphatidic acid treatment but cell bodies became phase dark, indicating cell spreading on the poly-l-lysine substratum. RT-PCR and Western blot analyses indicate that oligodendrocyte precursors and mature oligodendrocytes express mRNA and protein for LPA1, one of several LPA receptors. Thus lysophosphatidic acid may be signalling to Rho and stimulating actomyosin contraction in precursor oligodendrocytes by this family of receptors. The results show that lysophosphatidic acid signalling pathways influence retraction of processes in oligodendrocyte precursors but that this effect changes as oligodendrocytes differentiate.