The cellular interactions that drive the formation and maintenance of the insulating myelin sheath around axons are only partially understood. Leucine-rich glioma-inactivated (LGI) proteins play important roles in nervous system development and mutations in their genes have been associated with epilepsy and amyelination. Their function involves interactions with ADAM22 and ADAM23 cell surface receptors, possibly in apposing membranes, thus attenuating cellular interactions. LGI4-ADAM22 interactions are required for axonal sorting and myelination in the developing peripheral nervous system (PNS). Functional analysis revealed that, despite their high homology and affinity for ADAM22, LGI proteins are functionally distinct. To dissect the key residues in LGI proteins required for coordinating axonal sorting and myelination in the developing PNS, we adopted a phylogenetic and computational approach and demonstrate that the mechanism of action of LGI4 depends on a cluster of three amino acids on the outer surface of the LGI4 protein, thus providing a structural basis for the mechanistic differences in LGI protein function in nervous system development and evolution.