The neural cell adhesion molecule (NCAM) plays a key role in neural development, regeneration, and learning. In this study, we identified a synthetic peptide-ligand of the NCAM Ig1 module by combinatorial chemistry and showed it could modulate NCAM-mediated cell adhesion and signal transduction with high potency. In cultures of dissociated neurons, this peptide, termed C3, stimulated neurite outgrowth by activating a signaling pathway identical to that activated by homophilic NCAM binding. A similar effect was shown for the NCAM Ig2 module, the endogenous ligand of NCAM Ig1. By nuclear magnetic resonance spectroscopy, the C3 binding site in the NCAM Ig1 module was mapped and shown to be different from the binding site of the NCAM Ig2 module. The C3 peptide may prove useful as a lead in development of therapies for neurodegenerative disorders, and the C3 binding site of NCAM Ig1 may represent a target for discovery of nonpeptide drugs.