Previous experiments identified AL-1 as a glycosylphosphatidylinositol (GPI)-linked ligand for the Eph-related receptor, REK7, and showed that a REK7-IgG fusion protein blocks axon bundling in co-cultures of cortical neurons on astrocytes, suggesting a role for REK7 and AL-1 in axon fasciculation. Subsequent identification of RAGS, the chick homologue of AL-1, as a repellent axon guidance molecule in the developing chick visual system led to speculation that AL-1, expressed on astrocytes, provides a repellent stimulus for cortical axons, inducing them to bundle as an avoidance mechanism. Using a growth cone collapse assay to test this hypothesis, we show that a soluble AL-1-IgG fusion protein is a potent collapsing factor for embryonic rat cortical neurons. The response is strongly correlated with REK7 expression, implicating REK7 as a receptor mediating AL-1-induced collapse. Morphological collapse is preceded by an AL-1-IgG-induced reorganization of the actin cytoskeleton that resembles the effects of cytochalasin D. This suggests a pathway whereby REK7 activation by AL-1 leads to perturbation of the actin cytoskeleton, possibly by an effect on actin polymerization, followed by growth cone collapse. We further show that AL-1-IgG causes collapse of rat hippocampal neurons and rat retinal ganglion cells. These data suggest a role for REK7 and AL-1 in the patterning of axonal connections in the developing cortex, hippocampus and visual system.