Gangliosides on the external side of the plasma membrane are important modulators of cellular functions. In previous work we had found that in cultured human SK-N-MC neuroblastoma cells a cell surface sialidase activity specifically cleaved terminal sialic acids from gangliosides, leading to a shift from higher sialylated species to GM1 and a decrease of GM3. To further elucidate the function of the enzyme, we have now examined the consequences of ganglioside sialidase inhibition. When present in the culture medium, the ganglioside sialidase inhibitors 2-deoxy-2,3-dehydro-N-acetylneuraminic acid (NeuAc2en), heparin, and heparan sulfate caused dramatic changes in cell behavior. Thus, the inhibitors uniformly led to a complete release from contact inhibition of growth, and to the loss of the differentiation markers neuron-specific enolase and neurofilaments, and a decrease of cyclic AMP. In presence of NeuAc2en, cells that normally were spread out evenly and were firmly attached, appeared smaller, rounded, and only loosely adherent to the culture vessel. Exogenous addition of vibrio cholerae sialidase mimicked the action of the plasma membrane ganglioside sialidase by retarding cell proliferation and increasing intracellular acetylcholinesterase. That the ganglioside sialidase inhibitors in the culture medium indeed affected solely the cell surface enzyme and not also a lysosomal sialidase, was demonstrated in an experiment where the desialylation of exogenously added radioactive gangliosides was determined in absence and presence of NeuAc2en and NH4Cl, an inhibitor of lysosomal function. Taken together, our results suggest that the ganglioside sialidase on the surface of SK-N-MC cells is responsible for growth control and differentiation in this neuronal cell line.