A phage endoneuraminidase that specifically cleaves alpha-2, 8-linked polysialic acid has been found to be a useful probe for examining the biological role of this sugar moiety on the neural cell adhesion molecule (NCAM). The enzyme caused a 3.3-fold increase in the rate of NCAM-dependent aggregation of membrane vesicles from chicken embryonic brain, without the nonspecific effects previously encountered with the use of exoneuraminidases. The enhancement of aggregation was closely correlated with removal of sialic acid as assessed by electrophoretic mobility. Extension of this analysis to cultures of spinal ganglia indicated that removal of sialic acid by the endoneuraminidase results in an increase in the thickness of neurite bundles. This enhancement of fasciculation was reversed by addition of anti-NCAM Fab, suggesting that the enzyme treatment was not toxic and did not produce nonspecific effects on adhesion. Injection of the enzyme into the eyes of 3.5-d chicken embryos consistently produced a striking array of abnormalities in those parts of the neural retina that contained the highest concentrations of NCAM at the time of injection. These perturbations included a dramatic thickening of the neural epithelium in the posterior eye, a failure of cells in this region to elongate radially, formation of an ectopic optic fiber layer, and an incomplete association of the presumptive pigmented epithelium with the neural retina. These results provide the first direct evidence that the polysialic acid on NCAM has a regulatory effect on adhesion between living cells, and that the amount of this carbohydrate is critical for the normal morphogenesis of nerve tissue.