Peripheral nervous system myelin is an extension of the Schwann cell's plasma membrane that tightly enwraps axons in many layers and permits nerve impulses to be rapidly conducted. It is not known how these multiple membrane layers are held together in this compact form. Here we present evidence supporting the hypothesis that the extracellular leaflets of myelin are held together by the most abundant protein of myelin of the peripheral nervous system, P0, by homophilic interaction of its extracellular domains. Transfected Chinese hamster ovary cells expressing P0 protein adhere to each other in suspension, to form large aggregates, whereas cells that are identical but which do not express P0 do not. We also show that this aggregation is mediated by homophilic binding between P0-expressing cells and that the apposing plasma membranes of these cells specifically form desmosomes, whereas control transfected cells do not. As the only difference between the two cell populations is the expression of P0, this protein is apparently responsible for the changes in morphology and adhesion in the cells that express it. The idea that P0 is a homophilic adhesion molecule is supported by its inclusion in the immunoglobulin supergene family, all members of which are involved in recognition and/or adhesion.