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.