Polarized localization of membrane proteins to axons or dendrites is important for a variety of neuronal functions, including neurite outgrowth and synaptogenesis during neural development. Src homology 2 domain-containing protein tyrosine phosphatase (SHP) substrate-1 (SHPS-1) and its ligand cluster of differentiation 47 (CD47), both of which are members of the Ig superfamily of proteins, are thought to constitute an intercellular communication system in the CNS, although the physiological functions of this CD47-SHPS-1 system remain unknown. To provide insight into these functions, we have now examined the localization of SHPS-1 and CD47 in cultured hippocampal neurons. Endogenous SHPS-1 was detected at the surface of both axons and dendrites, whereas endogenous CD47 was localized predominantly to the surface of dendrites. Forced expression of these two proteins confirmed their distinct localizations. The extracellular regions of SHPS-1 and CD47 were responsible, at least in part, for their axonal and dendritic localizations, respectively; however, the axonal localization of SHPS-1 was not mediated by any one of the three Ig domains in its extracellular region. Overexpression of SHPS-1 and CD47 in distinct neurons resulted in marked accumulation of these proteins at sites of contact between SHPS-1-expressing axons and CD47-expressing dendrites. Such contact sites exhibited an enlarged structure but did not contain the synaptic marker protein vesicle-associated membrane protein-2. These results suggest that differential localization of SHPS-1 and CD47 at axons and dendrites generates a directional intercellular communication system that potentially contributes to regulation of synaptogenesis and the formation of neural networks.