Polysialic acid (polySia) is a major regulator of cell-cell interactions in the developing nervous system and a key factor in maintaining neural plasticity. As a polyanionic molecule with high water binding capacity, polySia increases the intercellular space and creates conditions that are permissive for cellular plasticity. While the prevailing model highlights polySia as a non-specific regulator of cell-cell contacts, this review concentrates on recent studies in knockout mice indicating that a crucial function of polySia resides in controlling interactions mediated by its predominant protein carrier, the neural cell adhesion molecule NCAM.