Neurexophilin 3 (Nxph3) is a specific ligand of synaptic alpha-neurexins that are essential for efficient neurotransmitter release. Previous biochemical work demonstrated that Nxph3 interacts with an extracellular domain of alpha-neurexins in a tight complex; however, no information is available on the localization or functional role of Nxph3 in the brain. Here, we generated lacZ reporter gene knock-in mice to investigate the distribution of Nxph3 at the single-cell level and Nxph3 knockout mice to examine its functional importance. Nxph3 expression was restricted mostly to subplate-derived neurons in cortical layer 6b, granule cells in the vestibulocerebellum, and Cajal-Retzius cells during development. Colabeling experiments demonstrated that neurons expressing Nxph3 do not belong to a uniform cell type. Morphological analyses and systematic behavioral testing of knockout mice revealed no anatomical defects but uncovered remarkable functional abnormalities in sensory information processing and motor coordination, evident by increased startle response, reduced prepulse inhibition, and poor rotarod performance. Since Nxph3-deficient mice behaved normally while performing a number of other tasks, our data suggest an important role for Nxph3 as a locally and temporally regulated neuropeptide-like molecule, presumably acting in a complex with alpha-neurexins in select neuronal circuits.