In a model of astrogliosis in vitro, cultured cortical astrocytes were triggered into a functionally reactive state by an immobilized fragment of the beta-amyloid peptide. Induced astrocytes produced an extracellular matrix that inhibited the outgrowth of embryonic CNS axons. Within the extracellular matrix deposited by reactive astrocytes, we found an overall increase in the deposition of chondroitin sulphate that accounted for the inhibition. Specifically, we have detected an increased biosynthesis of a small chondroitin/heparan sulphate proteoglycan that is a potent inhibitor of axon outgrowth. We further suggest that this proteoglycan, or related molecules yet to be discovered, may play a role in gliosis-mediated regenerative failure of CNS axons.