N-syndecan is a member of the syndecan family of transmembrane heparan sulfate proteoglycans that was cloned initially from neonatal rat Schwann cells and is the principal syndecan expressed during early postnatal development in the central and peripheral nervous systems. Purified N-syndecan binds in vitro with high affinity to several extracellular regulatory ligands, including basic fibroblast growth factor, the secreted adhesive protein heparin binding growth-associated molecule, and a novel collagen-like protein secreted by Schwann cells. These extracellular ligands utilize the heparan sulfate chains of N-syndecan for binding. Based on the striking amino acid sequence homology of the cytoplasmic domain of N-syndecan to syndecan-1, it is proposed that N-syndecan associates with the actin-based cytoskeleton. N-syndecan core proteins self associate by means of an unusual dimerization motif comprised of the transmembrane domain and a short flanking sequence in the ectodomain. Similar to other single transmembrane domain receptor proteins, it is suggested that ligand-regulated dimerization of N-syndecan represents a mechanism for regulating downstream signaling activities. In rat brain tissue a significant fraction of the N-syndecan molecules are present in a soluble form, presumably as a result of proteolytic membrane shedding. A model is presented for morphoregulatory activity of N-syndecan in which extracellular ligand-induced clustering of N-syndecan molecules on the cell surface promotes cytoskeletal association and reorganization. Membrane shedding separates the functional domains of the proteoglycan and terminates this activity.