The neurofibromatosis type 2 gene product merlin is known to provoke gliogenic tumors as a result of its mutagenic loss. Merlin's physiological anti-mitogenic function makes it unique among its ezrin-radixin-moesin (ERM) family members. Although ERM proteins and merlin are known to be expressed in glial cells of the peripheral nervous system and CNS, the neuronal expression pattern and function of merlin have been less well investigated. We report here expression of merlin in developing and mature neurons of the murine CNS. Within cerebellar Purkinje cells (PCs), merlin was localized in the soma, sprouting dendrites and axons. Merlin expression in PCs was high during the period of initial dendrite regression and declined during later phases of dendrite elongation. Consistently, merlin expression in vivo was increased in Engrailed-2-overexpressing PCs, which are characterized by a reduced dendritic extension. Furthermore, overexpression of merlin in dissociated cerebellar cultures and in neurogenic P19 cells caused a significant decline in neurite outgrowth, while, conversely, inhibition of merlin expression increased process formation. This effect was dependent on phosphorylation of serine 518 and involved the inactivation of the growth-promoting GTPase Rac. We thus provide evidence that merlin plays a pivotal role in controlling the neuronal wiring in the developing CNS.