Two closely related genes coding for NELL proteins (NELL1 and NELL2) have been cloned by the yeast two-hybrid screening of a rat brain cDNA library with the regulatory domain of protein kinase C βI (PKCβI) as bait. The rat NELL proteins show about 55% identity with each other and contain several protein motifs assigned to a secretion signal peptide, an NH₂-terminal thrombospondin-1 (TSP-1)-like module, five von Willebrand factor C domains, and six epidermal growth factor-like domains; the NELL proteins share many protein motifs with TSP-1. The NELL proteins expressed in COS-7 cells are homotrimeric glycoproteins and possess heparin-binding activity. Furthermore, while NELL1 and NELL2 show distinct subcellular localization in cytoplasm, they both are partially secreted into the culture medium of COS-7 cells. Although the NELL1 mRNA is faintly expressed in adult neural cells, the NELL2 mRNA is expressed abundantly, particularly in the pyramidal cells of rat hippocampus, showing neuronal high plasticity. During mouse embryogenesis, expression of the NELL2 mRNA is initiated 7–11 days postcoitum, simultaneously with neural plate formation. These results strongly suggest that the NELL2 protein, similar to but not identical with TSP-1, is involved in the growth and differentiation of neural cells. Additionally, the NELL1 and NELL2 mRNAs were found to be expressed abundantly in Burkitt's lymphoma Raji cells and colorectal adenocarcinoma SW480 cells, respectively. Thus, it is likely that the NELL proteins also participate in the growth, differentiation, and oncogenesis of cancer cell lines.