We have previously identified and purified a cell surface glycoprotein from retina and brain, called neural cell adhesion molecule or N-CAM, that appears to be involved in neural cell--cell adhesion, the fasciculation of neurites, and the formation of normal tissue patterns in the retina. The present studies reveal that artificial vesicles containing lipid and purified N-CAM bind to different cell types with a specificity similar to that of nerve cells. The same results were obtained with soluble N-CAM that had been briefly exposed to pH 3. In both cases the binding altered the rate of aggregation of neural cells and, like cell--cell adhesion, was inhibited by antibodies against N-CAM. The results support the proposal that N-CAM is a ligand in the formation of bonds between nerve cell membranes. Moreover, results of studies of vesicle--vesicle interactions and of N-CAM binding to cells coated with anti-(N-CAM) Fab' fragments were consistent with the idea that the N-CAM molecules on different cells may interact directly to form cell--cell bonds.