Normal glucose-stimulated insulin secretion is dependent on interactions between neighboring β cells. Elucidation of the reasons why this cell-to-cell contact is essential will probably yield critical insights into β cell maturation and function. In the central nervous system, transcellular protein interactions (i.e. interactions between proteins on the surfaces of different cells) involving neuroligins are key mediators of synaptic functional development. We previously demonstrated that β cells express neuroligin-2 and that insulin secretion is affected by changes in neuroligin-2 expression. Here we show that the effect of neuroligin-2 on insulin secretion is mediated by transcellular interactions. Neuroligin-2 binds with nanomolar affinity to a partner on the β cell surface and contributes to the increased insulin secretion brought about by β cell-to-β cell contact. It does so in a manner seemingly independent of interactions with neurexin, a known binding partner. As in the synapse, transcellular neuroligin-2 interactions enhance the functioning of the submembrane exocytic machinery. Also, as in the synapse, neuroligin-2 clustering is important. Neuroligin-2 in soluble form, rather than presented on a cell surface, decreases insulin secretion by rat islets and MIN-6 cells, most likely by interfering with endogenous neuroligin interactions. Prolonged contact with neuroligin-2-expressing cells increases INS-1 β cell proliferation and insulin content. These results extend the known parallels between the synaptic and β cell secretory machineries to extracellular interactions. Neuroligin-2 interactions are one of the few transcellular protein interactions thus far identified that directly enhance insulin secretion. Together, these results indicate a significant role for transcellular neuroligin-2 interactions in the establishment of β cell function.