Isoforms of the neuronal cell adhesion molecule (NCAM) carrying the linear homopolymer of alpha 2,8-linked sialic acid (polysialic acid, PSA) have emerged as particularly attractive candidates for promoting plasticity in the nervous system. The large negatively charged PSA chain of NCAM is postulated to be a spacer that reduces adhesion forces between cells allowing dynamic changes in membrane contacts. Accumulating evidence also suggests that PSA-NCAM-mediated interactions lead to activation of intracellular signaling cascades that are fundamental to the biological functions of the molecule. An important role of PSA-NCAM appears to be during development, when its expression level is high and where it contributes to the regulation of cell shape, growth or migration. However, PSA-NCAM does persist in adult brain structures such as the hippocampus that display a high degree of plasticity where it is involved in activity-induced synaptic plasticity. Recent advances in the field of PSA-NCAM research have not only consolidated the importance of this molecule in plasticity processes but also suggest a role for PSA-NCAM in the regulation of higher cognitive functions and psychiatric disorders. In this review, we discuss the role and mode of actions of PSA-NCAM in structural plasticity as well as its potential link to cognitive processes.