Synaptic transmission depends on the matching and alignment of presynaptically released transmitters and postsynaptic neurotransmitter receptors. Neuroligin (NL) and Neurexin (Nrxn) proteins are trans-synaptic adhesion molecules that are important in validation and maturation of specific synapses. NL isoforms NL1 and NL2 have specific functional roles in excitatory and inhibitory synapses, respectively, but the molecular basis behind this distinction is still unclear. We show here that the extracellular domain of NL2 confers its unique ability to enhance inhibitory synaptic function when overexpressed in rat hippocampal pyramidal neurons, whereas NL1 normally only promotes excitatory synapses. This specificity is conferred by presynaptic Nrxn isoforms, as NL1 can also induce functional inhibitory synapse connections when the presynaptic interneurons ectopically express an Nrxn isoform that binds to NL1. Our results indicate that trans-synaptic interaction with differentially expressed presynaptic Nrxns underlies the distinct functions of NL1 and NL2, and is sufficient to induce functional inhibitory synapse formation.