We describe a key role for the CD44 transmembrane glycoprotein in Schwann cell-neuron interactions. CD44 proteins have been implicated in cell adhesion and in the presentation of growth factors to high affinity receptors. We observed high CD44 expression in early rat neonatal nerves at times when Schwann cells proliferate but low expression in adult nerves, where CD44 was found in some nonmyelinating Schwann cells and to varying extents in some myelinating fibers. CD44 constitutively associated with erbB2 and erbB3, receptor tyrosine kinases that heterodimerize and signal in Schwann cells in response to neuregulins. Moreover, CD44 significantly enhanced neuregulin-induced erbB2 phosphorylation and erbB2-erbB3 heterodimerization. Reduction of CD44 expression in vitro resulted in loss of Schwann cell-neurite adhesion and Schwann cell apoptosis. CD44 is therefore crucial for maintaining neuron-Schwann cell interactions at least partly by facilitating neuregulin-induced erbB2-erbB3 activation.