In this paper, we have characterized the structure, evolutionary origin, and function of rat and human carcinoembryonic antigen-related cell adhesion molecule1 (CEACAM1) multifunctional Ig-like cell adhesion proteins that are expressed by many epithelial tissues. Restriction enzyme digestion reverse transcriptase-PCR analysis identified three cDNAs encoding novel CEACAM1 N-domains. Comparative sequence analysis showed that human and rat CEACAM1 N-domains segregated into two groups differing in similarity to rat CEACAM1(a)-4L and human CEACAM1. Sequence variability analysis indicated that both human and rat N-domains possessed two variable regions, and one contained a major adhesive epitope. Recombination analysis showed that the group of rat but not human N-domains with high sequence similarity was derived at least in part by recombination. Binding assays revealed that three monoclonal antibodies with strong reactivity for the CEACAM1(a)-4L N-domain showed no reactivity with CEACAM1(b)-4S, an allele with a different N-domain sequence. CEACAM1(b)-4S displayed adhesive activity efficiently blocked by a synthetic peptide corresponding to the adhesive epitope in CEACAM1(a)-4L. Blocking analysis also showed that the adhesive epitope for rat CEACAM1 was located downstream from the equivalent human and mouse epitopes. Glycosylation analysis demonstrated O-linked sugars on rat CEACAM1(b)-4S from COS-1 cells. However, this was not the alteration responsible for the lack of monoclonal antibody reactivity. When considered together with previous studies, our findings suggest an inverse relationship between functionality and amino acid sequence similarity to CEACAM1. Like IgG, the N-domain of CEACAM1 appears to tolerate 10-15% sequence diversification without loss of function but begins to show either altered specificity or diminished functionality at higher levels.