Mutations at the scabrous locus (sca) affect cell-cell signaling during neural development. Twenty-one mutant alleles of scabrous have been analyzed. Many synthesize no sca protein. In others, a defective protein is arrested intracellularly. Two mutants in which protein is not arrested must affect sca protein function outside the cell. Both affect the fibrinogen related domain (FReD), a 200-amino acid segment conserved in fibrinogen, tenascins, and other proteins. In fibrinogen, this region is involved in protein interactions and is altered in human mutations affecting blood clotting. In sca(UM2), an invariant Asp residue is replaced by Asn. In sca(MSKF) allele has dominant negative properties, indicating that the truncated amino-terminal portion interferes with the function of so me other gene product. These mutations show that the conserved FReD is essential for wild-type sca function, but suggest that the amino-terminal domain also interacts with other proteins, but other neural mutations were without effect. Models for the role of a two-domain protein in neural development are discussed.