Thy-1 is possibly the smallest of cell surface proteins – 110 amino acids folded into an Immunoglobulin variable domain, tethered to the outer leaflet of the cell surface membrane via just the two saturated fatty acids of its glycosylphosphatidylinositol (GPI) anchor. Yet Thy-1 is emerging as a key regulator of differentiation in cells of endodermal, mesodermal, and ectodermal origin, acting as both a ligand (for certain integrins and other receptors), and as a receptor, able to modulate signaling and hence differentiation in the Thy-1-expressing cell. This is an extraordinary diversity of molecular pathways to be controlled by a molecule that does not even cross the cell membrane. Here I review aspects of the cell biology of Thy-1, and studies of its role as deduced from gene knock-out studies, that suggest how this protein can participate in so many different signaling-related functions. While mechanisms differ in molecular detail, it appears overall that Thy-1 dampens down signaling to control function.