Myelin-derived axon outgrowth inhibitors, such as Nogo, may account for the lack of axonal regeneration in the central nervous system (CNS) after trauma in adult mammals. A 66-residue domain of Nogo (Nogo-66) is expressed on the surface of oligodendrocytes and can inhibit axonal outgrowth through an axonal Nogo-66 receptor (NgR). The IN-1 monoclonal antibody recognizes Nogo-A and promotes corticospinal tract regeneration and locomotor recovery; however, the undefined nature of the IN-1 epitope in Nogo, the limited specificity of IN-1 for Nogo, and nonspecific anti-myelin effects have prevented a firm conclusion about the role of Nogo-66 or NgR. Here, we identify competitive antagonists of NgR derived from amino-terminal peptide fragments of Nogo-66. The Nogo-66(1 40) antagonist peptide (NEP1 40) blocks Nogo-66 or CNS myelin inhibition of axonal outgrowth in vitro, demonstrating that NgR mediates a significant portion of axonal outgrowth inhibition by myelin. Intrathecal administration of NEP1 40 to rats with mid-thoracic spinal cord hemisection results in significant axon growth of the corticospinal tract, and improves functional recovery. Thus, Nogo-66 and NgR have central roles in limiting axonal regeneration after CNS injury, and NEP1-40 provides a potential therapeutic agent.