Merlin is the product of the neurofibromatosis type 2 (NF2) gene. In humans, loss of merlin is associated with the development of a variety of tumors including schwannomas, meningiomas, ependymomas and mesotheliomas. That both NF2 alleles must be inactivated for tumors to form indicates that merlin is a tumor suppressor. How merlin functions to suppress tumor growth is not fully understood. The overall objective of our work is to understand the normal function of merlin, and to explore molecular strategies by which abnormal phenotypes in merlin-deficient schwannoma cells may be reversed. During the last grant period, we discovered that merlin is a lipid raft-resident protein, consistent with its known role in signal transduction. We also identified a number of raft-resident merlin binding partners, whose interaction with merlin may play important roles in merlin function. These results have led us to hypothesize that the localization of merlin in lipid rafts is essential for its function. In the upcoming grant period, we propose to test this hypothesis by carrying out 3 specific aims. First, we will determine the functional significance of the association of merlin with lipid rafts, with special reference to human Schwann cells, the cell type relevant for the disease of neurofibromatosis type 2. Second, we will study in detail the role of the newly identified, raft-resident, merlin binding partner, PPM1B2, in merlin function by testing a new model of merlin regulation based on PPM1B2 dephosphorylation of merlin and merlin binding proteins. Third, we will explore the interaction between merlin and tropomodulin III, another merlin binding partner in lipid rafts, with reference to its potential impact on cell growth and motility. We anticipate that these studies will shed new light on pathways involved in merlin-mediated tumor suppression, and may suggest possible molecular targets for therapeutic strategies for tumors that arise from loss of merlin function.