Thy-1 is a membrane glycoprotein suggested to stabilize or inhibit growth of neuronal processes. However, its precise function has remained obscure, because its endogenous ligand is unknown. We previously showed that Thy-1 binds directly to α(V)β(3) integrin in trans eliciting responses in astrocytes. Nonetheless, whether α(V)β(3) integrin might also serve as a Thy-1-ligand triggering a neuronal response has not been explored. Thus, utilizing primary neurons and a neuron-derived cell line CAD, Thy-1-mediated effects of α(V)β(3) integrin on growth and retraction of neuronal processes were tested. In astrocyte-neuron co-cultures, endogenous α(V)β(3) integrin restricted neurite outgrowth. Likewise, α(V)β(3)-Fc was sufficient to suppress neurite extension in Thy-1(+), but not in Thy-1(-) CAD cells. In differentiating primary neurons exposed to α(V)β(3)-Fc, fewer and shorter dendrites were detected. This effect was abolished by cleavage of Thy-1 from the neuronal surface using phosphoinositide-specific phospholipase C (PI-PLC). Moreover, α(V)β(3)-Fc also induced retraction of already extended Thy-1(+)-axon-like neurites in differentiated CAD cells as well as of axonal terminals in differentiated primary neurons. Axonal retraction occurred when redistribution and clustering of Thy-1 molecules in the plasma membrane was induced by α(V)β(3) integrin. Binding of α(V)β(3)-Fc was detected in Thy-1 clusters during axon retraction of primary neurons. Moreover, α(V)β(3)-Fc-induced Thy-1 clustering correlated in time and space with redistribution and inactivation of Src kinase. Thus, our data indicates that α(V)β(3) integrin is a ligand for Thy-1 that upon binding not only restricts the growth of neurites, but also induces retraction of already existing processes by inducing Thy-1 clustering. We propose that these events participate in bi-directional astrocyte-neuron communication relevant to axonal repair after neuronal damage.