The vertebrate skeletal neuromuscular junction is the site at which motor neurons communicate with their target muscle fibers. At this synapse, as at synapses throughout the nervous system, efficient and appropriate communication requires the formation and precise alignment of specializations for transmitter release in the axon terminal with those for transmitter detection in the postsynaptic cell. Classical developmental studies demonstrate that synapse formation at the neuromuscular junction is a mutually inductive event; neurons induce postsynaptic differentiation in muscle cells and myofibers induce presynaptic differentiation in motor axon terminals. More recent experiments indicate that Schwann cells, which cap axon terminals, also play an active role in the formation and maintenance of the neuromuscular junction. Here, we review recent advances in the identification of molecules mediating such inductive interactions and the mechanisms by which they produce their effects. Although our discussion concerns events at developing neuromuscular junctions, it seems likely that similar molecules and mechanisms may act at neuron-neuron synapses in the peripheral as well as the central nervous system.