Despite the fact that several cell types residing in or travelling through the skin are targets and/or sources of nerve growth factor (NGF), little is known about the role of NGF in skin development, physiology and disease. Employing a previously defined skin organ culture assay for studying the proliferation of murine keratinocytes in their natural tissue environment, we have assessed the effect of murine NGF (7S) on keratinocyte proliferation in intact skin derived from two defined stages of the murine hair cycle. We found that 10-200 ng/ml NGF stimulated epidermal keratinocyte proliferation in organ-cultured C57 BL-6 mouse skin in the telogen phase of the hair cycle. Follicle keratinocyte proliferation was stimulated by 100 ng/ml NGF in telogen skin organ culture, but this concentration of NGF inhibited both epidermal and follicle keratinocyte proliferation in organ culture of anagen skin. The latter inhibitory effect of NGF was abrogated by co-incubation with neutralizing anti-NGF antibodies or with the protein kinase C inhibitor staurosporine. The proliferation-modulatory effects of NGF were associated with the induction of significant mast cell degranulation, and were inhibited by cromoglycate co-administration. This is the first report of a modulatory, hair cycle-dependent effect of NGF on keratinocyte proliferation in situ, which may require the presence of mast cells. Our study supports the notion of auto- and paracrine functions of NGF in murine skin physiology, which can be further assessed in the physiologically relevant mouse model delineated here.