Background: Neurons extend their dendrites and axons to build functional neural circuits, which are regulated by both positive and negative signals during development. Brain-derived neurotrophic factor (BDNF) is a positive regulator for neurite outgrowth and neuronal survival but the functions of its precursor (proBDNF) are less characterized. Methodology/Principal Findings: Here we show that proBDNF collapses neurite outgrowth in murine dorsal root ganglion (DRG) neurons and cortical neurons by activating RhoA via the p75 neurotrophin receptor (p75NTR). We demonstrated that the receptor proteins for proBDNF, p75NTR and sortilin, were highly expressed in cultured DRG or cortical neurons. ProBDNF caused a dramatic neurite collapse in a dose-dependent manner and this effect was about 500 fold more potent than myelin-associated glycoprotein. Neutralization of endogenous proBDNF by using antibodies enhanced neurite outgrowth in vitro and in vivo, but this effect was lost in p75NTR -/- mice. The neurite outgrowth of cortical neurons from p75NTR deficient (p75NTR -/- ) mice was insensitive to proBDNF. There was a time-dependent reduction of length and number of filopodia in response to proBDNF which was accompanied with a polarized RhoA activation in growth cones. Moreover, proBDNF treatment of cortical neurons resulted in a time-dependent activation of RhoA but not Cdc42 and the effect was absent in p75NTR -/- neurons. Rho kinase (ROCK) and the collapsin response mediator protein-2 (CRMP-2) were also involved in the proBDNF action. Conclusions: proBDNF has an opposing role in neurite outgrowth to that of mature BDNF. Our observations suggest that proBDNF collapses neurites outgrowth and filopodial growth cones by activating RhoA through the p75NTR signaling pathway.