When embryonic thalamic neurons are plated onto living slices of mouse forebrain, cell attachment and neurite outgrowth on different layers of the developing cerebral cortex vary dramatically, in ways that correlate with the timing and pattern of thalamocortical innervation. These layer-specific differences can be eliminated from embryonic day 16 slices by enzymatic removal of chondroitin sulfate (CS). The cortical plate (a zone avoided by thalamic axons in vivo) possesses inhibitory activity (anti-adhesive, neurite repelling) and the intermediate zone and subplate (in which thalamic axons normally grow) possess stimulatory activity (adhesive, neurite promoting), both of which are chondroitinase sensitive. These opposing activities appear not to reflect the presence of different CS proteoglycans (CSPGs) in different zones, but rather the presence of differentially localized CS-binding molecules, which can be competed away by soluble CS. This model reconciles conflicting reports on the actions of CSPGs in neural development, and suggests a role for CSPGs in the organization of matrix-bound cues in the brain.