RPTP is a cell adhesion molecule-like receptor protein tyrosine phosphatase involved in nervous system development. Its avian orthologue, known as cPTP or CRYP␣, promotes intraretinal axon growth and controls the morphology of growth cones. The molecular mechanisms underlying the functions of cPTP are still to be determined, since neither its physiological ligand(s) nor its substrates have been described. Nevertheless, a major class of ligand(s) is present in the retinal basal lamina and glial endfeet, the potent native growth substrate for retinal axons. We demonstrate here that cPTP is a heparin-binding protein and that its basal lamina ligands include the heparan sulfate proteoglycans (HSPGs) agrin and collagen XVIII. These molecules interact with high affinity with cPTP in vitro, and this binding is totally dependent upon their heparan sulfate chains. Using molecular modelling and site-directed mutagenesis, a binding site for heparin and heparan sulfate was identified in the first immunoglobulin-like domain of cPTP. HSPGs are therefore a novel class of heterotypic ligand for cPTP, suggesting that cPTP signaling in axons and growth cones is directly responsive to matrix-associated cues.The complex pattern of neural connectivity established during nervous system development relies on the ability of the axon's motile tip, the growth cone, to receive, transduce, and integrate multiple environmental signals. Protein phosphorylation on tyrosine residues plays a key role in these processes (21, 29). Two major families of enzymes, the protein tyrosine kinases and the protein tyrosine phosphatases (PTPs), control cellular phosphotyrosine levels. These enzymes are found in both cytoplasmic and transmembrane (receptor-like) forms, and the biochemical interactions between them lead to a diversity of cellular behaviors (25,76).Receptor protein tyrosine phosphatases (RPTPs) have recently joined the list of molecules involved in neural development and in particular in axon growth and guidance (reviewed in references 6, 68, 72, and 79). Type 2 RPTPs, containing cell adhesion molecule (CAM)-like extracellular regions, may be particularly well equipped to trigger signals involving cell-cell or cell-extracellular matrix contacts (68). Recent experiments with Drosophila have demonstrated the involvement of the RPTPs DLAR and DPTP69D in motor (19, 20, 50), retinal (27, 57), and midline (73) axon guidance. In leech, a LAR generelated RPTP (HmLAR2) is implicated in Comb cell behavior, specifically in process outgrowth and mutual avoidance by sibling growth cones (2, 28). Several vertebrate RPTPs have been shown to promote neurite outgrowth in cell culture, including cPTP (51), RPTP (23), RPTP (10), and RPTP␦ (82). Moreover, it has recently been shown that RPTP␦ also has a potential guidance function, at least in vitro (74).In mice, gene deficiencies in type 2 RPTPs lead to various abnormalities. LAR deficiency leads to a reduction in size of basal forebrain cholinergic neurons, diminished hippocampal innervation, and defects in o...