During the purification of laminin-proteoglycan complexes from rat RN22 Schwannoma cell-conditioned medium, a laminin-rich fraction was obtained which lacked neurite-promoting activity. Since laminin from several sources is known to have potent neurite-promoting activity, this result suggested that either this laminin was inactive or its activity was somehow masked by associated molecule(s). The latter possibility was supported by the demonstration that the inactive laminin-containing fraction inhibited active laminin-containing fractions. This inhibitory activity was partially purified by using ion exchange chromatography and isopycnic centrifugation. The purified material contained proteoglycan based on its high affinity for cationic resin, high buoyant density, large heterodisperse appearance on electrophoretic gels, ability to label with inorganic sulfate, sensitivity to trypsin and glycosaminoglycan lyases, and heat stability. A quantitative in vitro bioassay was used to monitor the inhibitor after treatments aimed at defining its activity. The isolated Schwannoma-derived inhibitor (a) inhibits the neurite-promoting activity of purified rat, mouse, and human laminin; (b) is active whether presented to laminin in solution or after either the inhibitor or laminin is first bound to the culture substratum; (c) does not act by displacing laminin from the substratum; (d) can be prevented from binding to neurite-promoting laminin substrates by polyclonal and monoclonal anti-laminin or polyclonal anti-entactin antibodies; and (e) is abolished by proteases or glycosaminoglycan lyases but not by heat. The above results suggest that the neurite-promoting activity of laminin is subject to regulation through association with a proteoglycan and entactin.