Glial cells surround neuronal endings to create enclosed compartments required for neuronal function. This architecture is seen at excitatory synapses and at sensory neuron receptive endings. Despite the prevalence and importance of these compartments, how they form is not known. We used the main sensory organ of C. elegans, the amphid, to investigate this issue. daf-6/Patched-related is a glia-expressed gene previously implicated in amphid sensory compartment morphogenesis. By comparing time series of electron-microscopy (EM) reconstructions of wild-type and daf-6 mutant embryos, we show that daf-6 acts to restrict compartment size. From a genetic screen, we found that mutations in the gene lit-1/Nemo-like kinase (NLK) suppress daf-6. EM and genetic studies demonstrate that lit-1 acts within glia, in counterbalance to daf-6, to promote sensory compartment expansion. Although LIT-1 has been shown to regulate Wnt signaling, our genetic studies demonstrate a novel, Wnt-independent role for LIT-1 in sensory compartment size control. The LIT-1 activator MOM-4/TAK1 is also important for compartment morphogenesis and both proteins line the glial sensory compartment. LIT-1 compartment localization is important for its function and requires neuronal signals. Furthermore, the conserved LIT-1 C-terminus is necessary and sufficient for this localization. Two-hybrid and co-immunoprecipitation studies demonstrate that the LIT-1 C-terminus binds both actin and the Wiskott-Aldrich syndrome protein (WASP), an actin regulator. We use fluorescence light microscopy and fluorescence EM methodology to show that actin is highly enriched around the amphid sensory compartment. Finally, our genetic studies demonstrate that WASP is important for compartment expansion and functions in the same pathway as LIT-1. The studies presented here uncover a novel, Wnt-independent role for the conserved Nemo-like kinase LIT-1 in controlling cell morphogenesis in conjunction with the actin cytoskeleton. Our results suggest that the opposing daf-6 and lit-1 glial pathways act together to control sensory compartment size.