Previously, we reported the cloning of alpha4 type V collagen, a novel member of the collagen type V gene family that is expressed by Schwann cells in developing peripheral nerves (Chernousov et al., 2000). The present study was performed to investigate the effects of this collagen on the adhesion and migration of premyelinating Schwann cells and neurite outgrowth from embryonic dorsal root ganglion neurons. Purified alpha4(V)-containing collagen isolated from Schwann cell conditioned medium (collagen type V(SC)) promoted migration of Schwann cells but inhibited outgrowth of axons from rat embryo dorsal root ganglia. Collagen type V(SC) blocked axonal outgrowth in the presence of otherwise active substrates such as collagen type IV, indicative of active inhibition. The noncollagen N-terminal domain of alpha4(V) promoted Schwann cell adhesion, spreading, and migration. These processes were inhibited by soluble heparin but not by function-blocking antibodies against alpha1- and alpha2-integrins. The collagen domain of pepsin-digested collagen type V was poorly adhesive for Schwann cells. The type V collagen domain but not the alpha4(V) N-terminal domain blocked neurite outgrowth from dorsal root ganglion neurons. In cocultures of dorsal root ganglion neurons and Schwann cells, collagen type V(SC) promoted axon fasciculation and association of axons with Schwann cells. These results suggest that in embryonic peripheral nerves, collagen type V(SC) plays a dual role in regulating cell migration. This represents a heretofore unrecognized function of peripheral nerve collagen fibrils in regulating patterns of peripheral nerve growth during development.