We have previously used synthetic peptides to identify a homophilic binding site between Lys-243 and Glu-252 (KYSFNYDGSE) in the third immunoglobulin-like domain of the chick neural cell adhesion molecule (NCAM). In this report, we show that the deletion of this decapeptide sequence from chick NCAM or the scrambling of the first 5 amino acid residues led to the abolition of the homophilic binding activity of NCAM, thus confirming the role of this sequence in NCAM-NCAM binding. To investigate the involvement of individual residues of this decapeptide in NCAM binding, competition experiments were carried out using peptide analogues with various amino acid substitutions. Substitution of both Lys-243 and Asp-249 with Ala or of the 3 aromatic residues with Ala led to a total loss of activity, highlighting the importance of these residues in NCAM binding. Site-directed mutagenesis was then employed to substitute individual amino acids within the decapeptide sequence with Ala. The homophilic binding activity of mutant NCAMs transiently expressed in COS-1 cells was determined using the NCAM-Covasphere binding assay. Substitution of the charged residues with alanine decreased NCAM binding activity, implicating electrostatic interactions in NCAM binding activity. Substitution of the aromatic residues Tyr-244 and Phe-246 with Ala abolished NCAM binding activity, suggesting that hydrophobic and/or aromatic interactions may play an important role in NCAM homophilic binding. Substitution of amino acids in the predicted beta-strand portion of the decapeptide with Pro, which would tend to disrupt beta-strand conformation, led to a substantial loss of activity. Thus, NCAM-NCAM binding may also depend on the beta-backbone structure of this site. These results are consistent with the involvement of multiple amino acids within the decapeptide sequence in NCAM homophilic interaction.