SH2B adaptor protein family members (SH2B1-3) regulate various physiological responses through affecting signaling, gene expression, and cell adhesion. SH2B1 and SH2B2 were reported to enhance nerve growth factor (NGF)-induced neuronal differentiation in PC12 cells, a well-established neuronal model system. In contrast, SH2B3 was reported to inhibit cell proliferation during the development of immune system. No study so far addresses the role of SH2B3 in the nervous system. In this study, we provide evidence suggesting that SH2B3 is expressed in the cortex of embryonic rat brain. Overexpression of SH2B3 not only inhibits NGF-induced differentiation of PC12 cells but also reduces neurite outgrowth of primary cortical neurons. SH2B3 does so by repressing NGF-induced activation of PLC gamma, MEK-ERK1/2 and PI3K-AKT pathways and the expression of Egr-1. SH2B3 is capable of binding to phosphorylated NGF receptor, TrkA, as well as SH2B1 beta. Our data further demonstrate that overexpression of SH2B3 reduces the interaction between SH2B1 beta and TrkA. Consistent with this finding, overexpressing the SH2 domain of SH2B3 is sufficient to inhibit NGF-induced neurite outgrowth. Together, our data demonstrate that SH2B3, unlike the other two family members, inhibits neuronal differentiation of PC12 cells and primary cortical neurons. Its inhibitory mechanism is likely through the competition of TrkA binding with the positive-acting SH2B1 and SH2B2.