Canavan's disease is an autosomal recessive disorder characterized by a deficiency of aspartoacylase and accumulation of N-acetylaspartic acid (NAA), leading to a severe leukodystrophy and spongy degeneration of the brain. N-Acetylaspartylglutamate (NAAG), the presumed product of NAA, also accumulates in this disease. The endogenous dipeptide NAAG has been suggested to have low potency at NMDA receptors. Here we have tested the actions of NAAG and NAA on NMDA-evoked responses in cultured cerebellar granule cells. In differentiating granule cells grown in low-K+ medium, NAAG negated the survival-promoting effects of NMDA but not K+ depolarization. Neither NAAG nor NAA alone promoted cell survival in low-K+ medium. The modest trophic action of 50 microM kainic acid in low-K+ medium was reinforced by the NMDA receptor antagonist dizocilpine maleate and by NAAG. In K(+)-differentiated granule cells, NAAG raised the threshold of NMDA neurotoxicity but not that of kainate. The observed activities of NAAG were overcome by excess NMDA and were not mimicked by NAA. These data raise the possibility that disruption of NMDA receptor processes by NAAG may be of pathophysiological relevance.