Individuals with the inherited cancer predisposition syndrome neurofibromatosis 2 (NF2) develop several central nervous system (CNS) malignancies, including glial cell neoplasms (ependymomas). Recent studies have suggested that the NF2 protein, merlin (or schwannomin), may regulate receptor tyrosine kinase signaling, intracellular mitogenic growth control pathways, or adherens junction organization in non-nervous-system cell types. For this report, we used glial fibrillary acidic protein conditional knockout mice and derivative glia to determine how merlin regulates CNS glial cell proliferation. We show that the loss of merlin in glial cells results in increased proliferation in vitro and in vivo. Merlin regulation of glial cell growth reflects deregulated Src activity, such that pharmacologic or genetic inhibition of Src activation reduces Nf2 ؊/؊ glial cell growth to wild-type levels. We further show that Src regulates Nf2؊/؊ glial cell growth by sequentially regulating FAK and paxillin phosphorylation/activity. Next, we demonstrate that Src activation results from merlin regulation of ErbB2 activation and that genetic or pharmacologic ErbB2 inhibition reduces Nf2 ؊/؊ glial cell Src/Src effector activation and proliferation to wild-type levels. Lastly, we show that merlin competes with Src for direct binding to ErbB2 and present a novel molecular mechanism for merlin regulation of ErbB2-dependent Src signaling and growth control.Neurofibromatosis type 2 (NF2) is an autosomal dominant inherited cancer syndrome in which affected individuals develop nervous system tumors, including peripheral nerve tumors (schwannomas), leptomeningeal tumors (meningiomas), and glial fibrillary acidic protein (GFAP)-immunoreactive glial cell tumors (spinal ependymomas). NF2 results from a germ line mutation in the NF2 tumor suppressor gene, located on chromosome 22q (46, 60). Tumors in this disorder arise following somatic inactivation of the one remaining wild-type (WT) NF2 allele in specific cell types. In this regard, NF2-associated schwannomas, meningiomas, and ependymomas all exhibit biallelic NF2 gene inactivation (33,47,61). In addition, NF2 gene inactivation is also observed in 50 to 78% of sporadic schwannomas, 32 to 84% of sporadic meningiomas, and 37% of sporadic ependymomas (21, 29), suggesting that this gene is also a key growth regulator in nonhereditary nervous system cancers.The NF2 gene was identified in 1993 and found to code for a 595-amino-acid protein, termed merlin or schwannomin (46, 60). Analysis of the predicted protein sequence revealed striking sequence similarity between merlin and a family of protein 4.1 family members that link the actin cytoskeleton to cell surface glycoproteins (55). In particular, merlin most closely resembles the ezrin/radixin/moesin (ERM) subfamily and has been shown to bind actin as well as to associate with several cell surface glycoproteins, including CD44 and 1-integrin (5, 32, 48). However, unlike the ERM proteins, merlin is unique in its capacity to function as a nervous s...