The identities of ligands interacting with protein tyrosine phosphatase (PTP) receptors to regulate neurite outgrowth remain mainly unknown. Analysis of cDNA and genomic clones encoding the rat leukocyte common antigen-related (LAR) PTP receptor predicted a small, ∼11 kDa ectodomain isoform, designated LARFN5C, containing a novel N terminal followed by a C-terminal segment of the LAR fifth fibronectin type III domain. RT-PCR and Northern blot analysis confirmed the presence of LARFN5C transcripts in brain. Transfection of COS cells with LARFN5C-Fc cDNA resulted in expression of the predicted protein, and Western blot analysis verified expression of ∼11 kDa LARFN5C protein in vivo and its developmental regulation. Beads coated with rLARFN5C demonstrated aggregation consistent with homophilic binding, and pull-down and immunoprecipitation assays demonstrated that rLARFN5C associates with the LAR receptor. rLARFN5C binding to COS cells was dependent on LAR expression, and rLARFN5C binding to LAR +/+ hippocampal neurons was fivefold greater than that found by using LAR-deficient (−/−) neurons. Substratum-bound rLARFN5C had potent neurite-promoting effects on LAR +/+ neurons, with a fivefold loss in potency with the use of LAR −/− neurons. rLARFN5C in solution at low nanomolar concentrations inhibited neurite outgrowth induced by substratum-bound rLARFN5C, consistent with receptor-based function. These studies suggest that a small ectodomain isoform of a PTP receptor can function as a ligand for the same receptor to promote neurite outgrowth.