Neurofibromatosis 2 (NF2) protein (merlin; schwannomin) is a tumor suppressor involved in tumorigenesis of NF2-associated and sporadic schwannomas and meningiomas. The protein shares the domain structure of three homologous proteins: ezrin, radixin and moesin (ERM). ERM proteins function as membrane organizers and may act as linkers between plasma membrane molecules, such as CD44 and ICAM-2, and the cytoskeleton. We analyzed the distribution and effects of transfected NF2 protein in COS-1, CHO and 293 cells, and endogenous NF2 protein in U251 glioma cells. The distribution was compared to ezrin, CD44 and F-actin. Both transfected and endogenous NF2 protein localized underneath the plasma membrane in a pattern typical of an ERM protein. In COS-1 transfectants, NF2 protein typically codistributed with ezrin but, in cells with poorly developed actin cytoskeleton, it replaced ezrin in filopodia and ruffling edges. NF2 protein colocalized with CD44, which in transfected cells accumulated into restructured cell membrane protrusions. The association of CD44 and NF2 protein was further suggested by binding of CD44 from cellular lysates to recombinant NF2 protein. Interaction between NF2 protein and the actin-containing cytoskeleton was indicated by partial colocalization, by cytochalasin B-induced coclustering, and by retention of NF2 protein in the detergent-insoluble fraction. Transfected NF2 protein induced morphogenic changes. The cells contained restructured membrane extensions and blebs, and CHO cells expressing NF2 protein were more elongated than control transfectants. In conclusion, NF2 protein possesses functional properties of an ERM family member.