Neurofibromatosis type 2 (NF2) is a dominantly inherited disease characterized by the formation of bilateral acoustic schwannomas and other benign tumours associated with the central nervous system. The NF2 protein, also known as merlin or schwannomin, is a recently cloned tumour suppressor and is mutated or inactivated in most schwannomas and meningiomas. Homology analysis indicates that merlin is most closely related to members of the protein 4.1 superfamily especially ezrin, radixin and moesin, the ERM proteins. ERM proteins link membrane proteins to the cytoskeleton. It has been speculated that disruption of a similar membrane-linking role for merlin is involved in the development of tumours. This review focuses on what is now known of the organization and role of merlin's functional domains and how its activity might be regulated. Recent evidence of post-translational regulatory mechanisms which offer hope for new drug intervention strategies to help alleviate this debilitating disease are asses sed.