B lymphocyte stimulator (BLyS), a tumor necrosis factor family protein essential for B cell development, was previously shown to be expressed at an elevated level in the CNS of multiple sclerosis patients. Although it may be involved in CNS diseases, its exact functions in CNS remain unknown. We hypothesize that BLyS may be a negative regulator for neuronal functions. Here Nogo-66 receptor (NgR) is identified as a high affinity receptor for BLyS, which inhibits dorsal root ganglion outgrowth in culture. The inhibition by BLyS can be reversed by a truncated NgR or by removal of glycosylphosphatidylinositol-linked proteins from neurons. More importantly, the inhibitory effect by BLyS is significantly diminished for neurons isolated from NgR(-/-) mice. Furthermore, expressions of BLyS and NgR are also found to be associated with astrocytes and macrophages/microglial cells at spinal cord injury sites. Thus, BLyS can function independently of myelin-associated inhibitors and likely serves as a redundant NgR ligand that negatively influences axonal outgrowth in CNS.