Immobilized and diffusible molecular cues regulate axon guidance during development. GFRα1, a GPI-anchored receptor for GDNF, is expressed as both membrane bound and secreted forms by accessory nerve cells and peripheral targets of developing sensory and sympathetic neurons during the period of target innervation. A relative deficit of GFRα1 in developing axons allows exogenous GFRα1 to capture GDNF and present it for recognition by axonal c-Ret receptors. Exogenous GFRα1 potentiates neurite outgrowth and acts as a long-range directional cue by creating positional information for c-Ret-expressing axons in the presence of a uniform concentration of GDNF. Soluble GFRα1 prolongs GDNF-mediated activation of cyclin-dependent kinase 5 (Cdk5), an event required for GFRα1-induced neurite outgrowth and axon guidance. Together with GDNF, target-derived GFRα1 can function in a non-cell-autonomous fashion as a chemoattractant cue with outgrowth promoting activity for peripheral neurons.