The molecular mechanisms controlling synaptogenesis in the central nervous system (CNS) are poorly understood. Previous reports showed that a glia-derived factor strongly promotes synapse development in cultures of purified CNS neurons. Here, we identify this factor as cholesterol complexed to apolipoprotein E-containing lipoproteins. CNS neurons produce enough cholesterol to survive and grow, but the formation of numerous mature synapses demands additional amounts that must be provided by glia. Thus, the availability of cholesterol appears to limit synapse development. This may explain the delayed onset of CNS synaptogenesis after glia differentiation and neurobehavioral manifestations of defects in cholesterol or lipoprotein homeostasis.