Neuron-glia cell adhesion molecule (Ng-CAM) mediates cell adhesion between neurons homophilically and between neurons and glia heterophilically; it also promotes neurite outgrowth. In the chick brain, Ng-CAM is detected as glycoproteins of 190 and 210 kD (Ng-CAM200) with posttranslational cleavage products of 135 kD (F135, which contains most of the extracellular region) and 80 kD (F80, which includes the transmembrane and the cytoplasmic domains). To examine the functions of each of these components, we have expressed Ng-CAM200, F135, and F80 in murine L cells, and F135 and F80 as GST fusion proteins in the pGEX vector in bacteria. Appropriately transfected L cells expressed each of these proteins on their surfaces; F135 was also found in the media of cells transfected with Ng-CAM200 and F135. In addition to binding homophilically, cells transfected with Ng-CAM200 and F135 bound heterophilically to untransfected L cells, suggesting that there is a ligand for Ng-CAM on fibroblasts that may be related to the glial ligand. Detailed studies using the transfected cells and the fusion proteins indicated that both the homophilic and the heterophilic binding activities of Ng-CAM are localized in the F135 fragment of the molecule. The results also indicated that proteolytic cleavage of Ng-CAM200 is not required either for its expression on the cell surface or for cell adhesion and that there is an "anchor" for F135 on L cells (and presumably on neurons). In contrast to the cell binding results, the F80 but not the F135 fusion protein enhanced the outgrowth of neurites from dorsal root ganglion cells; this activity was associated with the FnIII repeats of F80. The observations that a protein corresponding to F135 contains the cell aggregation sites whereas one corresponding to the F80 has the ability to promote neurite outgrowth suggest that proteolytic cleavage may be an important event in regulating these Ng-CAM activities during embryonic development and neural regeneration.