Localization of presynaptic components to synaptic sites is critical for hippocampal synapse formation. Cell adhesion–regulated signaling is important for synaptic development and function, but little is known about differentiation of the presynaptic compartment. In this study, we describe a pathway that promotes presynaptic development involving p120catenin (p120ctn), the cytoplasmic tyrosine kinase Fer, the protein phosphatase SHP-2, and β-catenin. Presynaptic Fer depletion prevents localization of active zone constituents and synaptic vesicles and inhibits excitatory synapse formation and synaptic transmission. Depletion of p120ctn or SHP-2 similarly disrupts synaptic vesicle localization with active SHP-2, restoring synapse formation in the absence of Fer. Fer or SHP-2 depletion results in elevated tyrosine phosphorylation of β-catenin. β-Catenin overexpression restores normal synaptic vesicle localization in the absence of Fer or SHP-2. Our results indicate that a presynaptic signaling pathway through p120ctn, Fer, SHP-2, and β-catenin promotes excitatory synapse development and function.