In the mammalian brain, the specification of a single axon and multiple dendrites occurs early in the differentiation of most neuron types. Numerous intracellular signaling events for axon specification have been described in detail. However, the identity of the extracellular factor(s) that initiate neuronal polarity in vivo is unknown. Here, we report that transforming growth factor beta (TGF-beta) initiates signaling pathways both in vivo and in vitro to fate naive neurites into axons. Neocortical neurons lacking the type II TGF-beta receptor (TbetaR2) fail to initiate axons during development. Exogenous TGF-beta is sufficient to direct the rapid growth and differentiation of an axon, and genetic enhancement of receptor activity promotes the formation of multiple axons. Finally, we show that the bulk of these TGF-beta-dependent events are mediated by site-specific phosphorylation of Par6. These results define an extrinsic cue for neuronal polarity in vivo that patterns neural circuits in the developing brain.