The CLE (CLVATA3/ESR-related) family of plant polypeptide signaling molecules shares a conserved 14-amino-acid (aa) motif, designated the CLE motif, which recent studies suggest is sufficient for CLE function in vitro. In this study, we report that Arabidopsis CLE proteins can function in a tissue-specific manner and confirm some CLE factors can act through different receptors. Using domain swapping, we show for the first time that the CLE motif likely determines much of the functional tissue-specificity of the proteins in planta. However, we also provide evidence in support of the new view that sequences outside the CLE motif (14 aa) contribute to CLE function and functional specificity in vivo. Additionally, we report that deletion of the putative signal peptide from different CLE proteins completely inactivates CLE function in vivo, whereas exchanging the CLE signal peptides with a conventional signal peptide from a rice glycine-rich cell wall protein also influences CLE function. We thus propose that the CLE motif itself determines its functional tissue-specificity by dictating the direct recognition and interaction of each CLE peptide with its optimal receptor(s), whereas the receptor(s) may be available in a tissue-specific manner. On the other hand, the sequences outside the CLE motif may influence CLE function by affecting the processing of CLE peptides, resulting in a change in the availability and/or abundance of CLE peptides in specific tissues and/or cells.