We have reported the induction of glial cell line-derived neurotrophic factor, a potent survival factor for dopaminergic neurons, in the C17.2 neural stem cell line following in vitro treatment with melatonin. Furthermore, we have detected the melatonin MT(1) receptor in these cells. Given these findings and recent evidence that melatonin may play a role in cellular differentiation, we examined whether this indoleamine induces morphological and transcriptional changes suggestive of a neuronal phenotype in C17.2 cells. Moreover, in order to extend preliminary evidence of a potential role for melatonin in epigenetic modulation, its effects on the mRNA expression of several histone deacetylase (HDAC) isoforms and on histone acetylation were examined. Physiological concentrations of melatonin (nanomolar range) increased neurite-like extensions and induced mRNA expression of the neural stem cell marker, nestin, the early neuronal marker beta-III-tubulin and the orphan nuclear receptor nurr1 in C17.2 cells. The indoleamine also significantly increased mRNA expression for various HDAC isoforms, including HDAC3, HDAC5, and HDAC7. Importantly, treatment with melatonin for 24 hr caused a significant increase in histone H3 acetylation, which is associated with chromatin remodeling and gene transcription. Since the melatonin MT(2) receptor was not detected in C17.2 cells, it is likely that the MT(1) receptor is involved in mediating these physiological effects of melatonin. These findings suggest novel roles for melatonin in stem cell differentiation and epigenetic modulation of gene transcription.