CNS myelin contains axon outgrowth inhibitors, such as Nogo, that restrict regenerative growth after injury. An understanding of the mechanism of Nogo signaling through its receptor (NgR) is critical to developing strategies for overcoming Nogo-mediated inhibition. Here we analyze the function of NgR domains in outgrowth inhibition. Analysis of alkaline phosphatase (AP)-Nogo binding in COS-7 cells reveals that the leucine-rich repeat domain is necessary and sufficient for Nogo binding and NgR multimerization. Viral infection of embryonic day 7 chick retinal ganglion cells with mutated NgR demonstrates that the NgR C-terminal domain is required for inhibitory signaling but not ligand binding. The NgR glycosylphosphatidylinositol domain is not essential for inhibitory signaling but may facilitate Nogo responses. From this analysis, we have developed a soluble, truncated version of the Nogo receptor that antagonizes outgrowth inhibition on both myelin and Nogo substrates. These data suggest that NgR mediates a significant fraction of myelin inhibition of axon outgrowth.