Synaptic cell adhesion molecules regulate multiple steps of synapse formation and maturation. The great diversity of neuronal synapses predicts the presence of a large number of adhesion molecules that control synapse formation through trans-synaptic and heterophilic adhesion. I identify a novel trans-synaptic interaction between NGL-3, a PSD-95-interacting postsynaptic adhesion molecule, and LAR, a receptor protein tyrosine phosphatase. The leucine-rich repeat (LRR) domain of NGL-3, containing nine LRRs, interacts with the first two fibronectin III (FNIII) domains of LAR to induce bidirectional synapse formation. Moreover, Gln 96 in the first LRR motif of NGL-3 is critical for LAR binding and induction of presynaptic differentiation. Neuronal overexpression of NGL-3 increases presynaptic contacts on dendrites of transfected neurons. Direct aggregation of NGL-3 on dendrites induces coclustering of excitatory postsynaptic proteins. Knockdown of NGL-3 reduces the number of excitatory synapses, but not inhibitory synapses. These results suggest that trans-interaction between NGL-3 and LAR is involved in excitatory synaptic differentiation.