Agrin induces synaptic differentiation at the skeletal neuromuscular junction (NMJ); both pre- and postsynaptic differentiation are drastically impaired in its absence. Multiple alternatively spliced forms of agrin that differ in binding characteristics and bioactivity are synthesized by nerve and muscle cells. We used surgical chimeras, isoform-specific mutant mice, and nerve-muscle cocultures to determine the origins and nature of the agrin required for synaptogenesis. We show that agrin containing Z exons (Z+) is a critical nerve-derived inducer of postsynaptic differentiation, whereas neural isoforms containing a heparin binding site (Y+) and all muscle-derived isoforms are dispensable for major steps in synaptogenesis. Our results also suggest that the requirement of agrin for presynaptic differentiation is mediated indirectly by its ability to promote postsynaptic production or localization of appropriate retrograde signals.