HB-GAM (Heparin-binding Growth-associated Molecule, also designated as pleiotrophin) and midkine form a two-member family of extracellular matrix proteins that bind tightly to sulfated carbohydrate structures such as heparan sulfate. These proteins are used by developing neurons as extracellular cues in axonal growth and guidance. HB-GAM was recently reported to enhance differentiation of neural stem cells. Based on the solution structure of HB-GAM we have recently shown that HB-GAM consists of two ß-sheet domains flanked by flexible lysine-rich N- and C-terminal tails with no apparent structure. These domains are homologous to thrombospondin type I -repeats present in numerous extracellular proteins that interact with the cell surface. Our findings show that the two ß-sheet domains fold independently. We show that the domains but not the lysine-rich tails in HB-GAM are required and sufficient for interaction with hippocampal neurons. The individual domains bind heparan sulfate weakly and fail to produce significant biological effects in neurite outgrowth and long-term potentiation assays. The amino acids in the linker region joining the two domains may be replaced with glycines with no effect on protein function. These results suggest a co-operative action of the two ß-sheet domains in the biologically relevant interaction with neuron surface heparan sulfate.