Formation of neurites and their differentiation into axons and dendrites requires precisely controlled changes in the cytoskeleton. While small GTPases of the Rho family appear to be involved in this regulation, it is still unclear how Rho function affects axonal and dendritic growth during development. Using hippocampal neurones at defined states of differentiation, we have dissected the function of RhoA in axonal and dendritic growth. Expression of a dominant negative RhoA variant inhibited axonal growth, whereas dendritic growth was promoted. The opposite phenotype was observed when a constitutively active RhoA variant was expressed. Inactivation of Rho by C3-catalysed ADP-ribosylation using C3 isoforms (Clostridium limosum, C3(lim) or Staphylococcus aureus, C3(stau2)), diminished axonal branching. By contrast, extracellularly applied nanomolar concentrations of C3 from C. botulinum (C3(bot)) or enzymatically dead C3(bot) significantly increased axon growth and axon branching. Taken together, axonal development requires activation of RhoA, whereas dendritic development benefits from its inactivation. However, extracellular application of enzymatically active or dead C3(bot) exclusively promotes axonal growth and branching suggesting a novel neurotrophic function of C3 that is independent from its enzymatic activity.