Receptor-type protein tyrosine phosphatase p (RPTPJ]) is expressed in the developing nervous system and contains a carbonic anhydrase (CAH) domain as well as a fibronectin type III repeat in its extracellular domain. Fusion proteins containing these domains were used to search for ligands of RPTPp. The CAH domain bound specifically to a 140 kDa protein expressed on the surface of neuronal cells. Expression cloning in COS7 cells revealed that this protein is contactin, a GPI membrane-anchored neuronal cell recognition molecule. The CAH domain of RPTPp induced cell adhesion and neurite growth of primary tectal neurons, and differentiation of neuroblastoma cells. These responses were blocked by antibodies against contactin, demonstrating that contactin is a neuronal receptor for RPTPI~. These experiments show that an individual domain of RPTPI $ acts as a functional ligand for the neuronal receptor contactin. The interaction between contactin and RPTPp may generate unidirectional or bidirectional signals during neural development.