HB-GAM (heparin-binding growth-associated molecule; p18) was previously isolated as a neurite outgrowth-promoting protein that is expressed at high levels in perinatal rat brain. cDNA cloning and expression revealed that HB-GAM is a novel secretory protein that is homologous with the retinoic acid-inducible MK protein. In the present paper we have used affinity-purified anti-peptide and anti-protein antibodies to study the expression of HB-GAM in the developing nervous system of the rat. In general, HB-GAM accumulates to extracellular structures that line growing axonal processes but is absent or only occurs at low levels in the axonal pathways after neurite extension has essentially ceased. During early stages of the nervous system development, HB-GAM is strongly expressed in the developing fiber tracts of the peripheral nervous system on embryonic days 12-14 (E12-E14). In the early central nervous system, HB-GAM is first expressed in a radial pattern along the neuroepithelial cells on E11-E12 and in early ascending neuron fibers in superficial layers of the brain vesicles on E12-E14. On E16-E18, HB-GAM is strongly expressed in the subplate and the marginal zone of the primordial neocortex. After this local expression in the primordial brain, HB-GAM is more widely expressed in the pathways of the developing axons during the late embryonic and early postnatal period. We have also extended in vitro studies on the interactions of HB-GAM with perinatal rat brain neurons by creating patterned substrates of HB-GAM upon culture wells and upon mixtures of extracellular matrix structures. These studies confirm the neurite-promoting effect of HB-GAM and suggest, together with the patterns of tissue localization, that HB-GAM may also guide axonal processes of brain neurons. The interactions of HB-GAM with brain neurons are specifically inhibited by heparin and its fragments and by incubation of the neurons with heparitinase. We suggest that in developing nervous tissues HB-GAM is deposited to an extracellular location in developing axon pathways and it interacts with heparin-like molecules of the neuron surface to promote formation of neural connections.