A myelin-associated protein from the central nervous system, the neurite growth inhibitor NI-35, inhibits regeneration of lesioned neuronal fiber tracts in vivo and growth of neurites in vitro. Growth cones of cultured rat dorsal root ganglion neurons arrested their growth and collapsed when exposed to liposomes containing NI-35. Before morphological changes, the concentration of free intracellular calcium ([Ca²⁺]_i) showed a rapid and large increase in growth cones exposed to liposomes containing NI-35. Neither an increase in [Ca²⁺]_i nor collapse of growth cones was detected in the presence of antibodies to NI-35. Dantrolene, an inhibitor of calcium release from caffeine-sensitive intracellular calcium stores, protected growth cones from collapse evoked by NI-35. Depletion of these caffeine-sensitive intracellular calcium stores prevented the increase in [Ca²⁺]_i evoked by NI-35. The NI-35-evoked cascade of intracellular messengers that mediates collapse of growth cones includes the crucial step of calcium release from intracellular stores.