Nel is a glycoprotein containing five chordin-like and six epidermal growth factor-like domains and is strongly expressed in the nervous system. In this study, we have examined expression patterns and in vitro functions of Nel in the chicken retinotectal system. We have found that in the developing tectum, expression of Nel is localized in specific laminae that retinal axons normally do not enter, including the border between the retinorecipient and non-retinorecipient laminae. Nel-binding activity is detected on retinal axons both in vivo and in vitro, suggesting that retinal axons express a receptor for Nel. In vitro, Nel inhibits retinal axon outgrowth and induces growth cone collapse and axon retraction. These results indicate that Nel acts as an inhibitory guidance cue for retinal axons, and suggest its roles in the establishment of the lamina-specificity in the retinotectal projection.