In transfected cells, adhesion G protein-coupled receptors (GPCRs) are activated by tethered agonists that are embedded in their canonical autoproteolytic GAIN domain. It is unknown, however, whether a tethered agonist-dependent activation mechanism generally mediates the physiological functions of adhesion GPCRs. Here, we show that G protein signaling by BAI3 (Adgrb3), a brain-specific adhesion GPCR, is essential for its functions in controlling axon and dendrite growth and promoting synapse formation. Moreover, our signal transduction assays confirm that constitutive exposure of BAI3's tethered agonist massively stimulates (~5-fold) its GPCR activity. However, the constitutive exposure of BAI3's tethered agonist, produced by deletion of its extracellular domains, blocked instead of activating BAI3's functions in regulating axonal and dendritic growth and promoting synapse formation. Moreover, inactivating mutations of BAI3's tethered agonist or deletion of BAI3's constituent GAIN domain did not detectably impair BAI3's physiological functions. Thus, the GPCR activity of BAI3 is functionally required, whereas tethered agonist-mediated stimulation of its GPCR activity is not.