Nogo has been identified as a component of the central nervous system (CNS) myelin that prevents axonal regeneration in the adult vertebrate CNS. Analysis of Nogo-A has shown that an axon-inhibiting domain of 66 amino acids is expressed at the extracellular surface and at the endoplasmic reticulum lumen of transfected cells and oligodendrocytes. The acidic amino terminus of Nogo-A is detected at the cytosolic face of cellular membranes and may contribute to inhibition of axon regeneration at sites of oligodendrocyte injury^,. Here we show that the extracellular domain of Nogo (Nogo-66) inhibits axonal extension, but does not alter non-neuronal cell morphology. In contrast, a multivalent form of the N terminus of Nogo-A affects the morphology of both neurons and other cell types. Here we identify a brain-specific, leucine-rich-repeat protein with high affinity for soluble Nogo-66. Cleavage of the Nogo-66 receptor and other glycophosphatidylinositol-linked proteins from axonal surfaces renders neurons insensitive to Nogo-66. Nogo-66 receptor expression is sufficient to impart Nogo-66 axonal inhibition to unresponsive neurons. Disruption of the interaction between Nogo-66 and its receptor provides the potential for enhanced recovery after human CNS injury.