The formation and plasticity of synaptic connections rely on regulatory interactions between pre- and postsynaptic cells. We show that the Drosophila heparan sulfate proteoglycans (HSPGs) Syndecan (Sdc) and Dallylike (Dlp) are synaptic proteins necessary to control distinct aspects of synaptic biology. Sdc promotes the growth of presynaptic terminals, whereas Dlp regulates active zone form and function. Both Sdc and Dlp bind at high affinity to the protein tyrosine phosphatase LAR, a conserved receptor that controls both NMJ growth and active zone morphogenesis. These data and double mutant assays showing a requirement of LAR for actions of both HSPGs lead to a model in which presynaptic LAR is under complex control, with Sdc promoting and Dlp inhibiting LAR in order to control synapse morphogenesis and function.