During mouse brain maturation cellular transglutaminase specific activity increases 2.5 fold from day 3 to adulthood. A more pronounced increase is seen during morphological differentiation of mouse neuroblastoma cells, where serum withdrawal induces neurite outgrowth concomitant with a 10 fold increase in transglutaminase specific activity. In contrast, non-dividing neuroblastoma cells lacking neurites show only a 1.5 fold increase in enzyme specific activity. Transglutaminase activity does not reach maximal levels until extensive neurite formation has occurred. More than 80% of the transglutaminase activity is found in the soluble component of brain and neuroblastoma homogenates. Using [3H]-putrescine as the acyl acceptor, endogenous acyl donor substrates in the neuroblastoma cells included proteins that comigrated on SDS-PAGE with tubulin and actin; however, very high molecular weight crosslinked material is the major reaction product in vitro. When purified brain tubulin, microtubule associated proteins and microtubules were compared as exogenous substrates, only the polymeric microtubules were a good acyl donor substrate. Furthermore, preincubation of purified tubulin with transglutaminase and putrescine stimulated both the rate and extent of microtubule assembly. These findings suggest that transglutaminase may mediate covalent crosslinking of microtubules to other cellular components, or the post-translational modification of tubulin by the formation of gamma-glutamylamines.