Glypican 4 and glypican 6 are identified as astrocyte-secreted signals that induce the formation of functional, rather than structural, synapses through the recruitment to the neuron surface of the GluA1 subunits of the AMPA glutamate receptor. Molecular signals released by astrocytes, the dominant type of glial cell found in the brain, have previously been identified as influential regulators in the formation of new synapses in the developing central nervous system. However, these molecules mostly induce the structural synapse, with the connection itself remaining functionally silent. Here, Allen et al. biochemically isolate other astrocyte-derived signals, glypicans 4 and 6, which induce functional synapses and are sufficient to increase the frequency of excitatory synaptic events. This is achieved by enhancing the density of AMPA-sensitive glutamate receptors at the surface of the synapse. Glypican 6 defects have been observed in human disorders involving synaptic dysfunction, suggesting a role for glypicans as regulators of neuronal circuit formation in both development and disease. In the developing central nervous system (CNS), the control of synapse number and function is critical to the formation of neural circuits. We previously demonstrated that astrocyte-secreted factors powerfully induce the formation of functional excitatory synapses between CNS neurons1. Astrocyte-secreted thrombospondins induce the formation of structural synapses, but these synapses are postsynaptically silent2. Here we use biochemical fractionation of astrocyte-conditioned medium to identify glypican 4 (Gpc4) and glypican 6 (Gpc6) as astrocyte-secreted signals sufficient to induce functional synapses between purified retinal ganglion cell neurons, and show that depletion of these molecules from astrocyte-conditioned medium significantly reduces its ability to induce postsynaptic activity. Application of Gpc4 to purified neurons is sufficient to increase the frequency and amplitude of glutamatergic synaptic events. This is achieved by increasing the surface level and clustering, but not overall cellular protein level, of the GluA1 subunit of the AMPA (α-amino-3-hydroxy-5-methyl-4-isoxazole propionic acid) glutamate receptor (AMPAR). Gpc4 and Gpc6 are expressed by astrocytes in vivo in the developing CNS, with Gpc4 expression enriched in the hippocampus and Gpc6 enriched in the cerebellum. Finally, we demonstrate that Gpc4-deficient mice have defective synapse formation, with decreased amplitude of excitatory synaptic currents in the developing hippocampus and reduced recruitment of AMPARs to synapses. These data identify glypicans as a family of novel astrocyte-derived molecules that are necessary and sufficient to promote glutamate receptor clustering and receptivity and to induce the formation of postsynaptically functioning CNS synapses.