Formation of the neuromuscular junction (NMJ) depends upon a nerve-derived protein, agrin, acting by means of a muscle-specific receptor tyrosine kinase, MuSK, as well as a required accessory receptor protein known as MASC. We report that MuSK does not merely play a structural role by demonstrating that MuSK kinase activity is required for inducing acetylcholine receptor (AChR) clustering. We also show that MuSK is necessary, and that MuSK kinase domain activation is sufficient, to mediate a key early event in NMJ formation—phosphorylation of the AChR. However, MuSK kinase domain activation and the resulting AChR phosphorylation are not sufficient for AChR clustering; thus we show that the MuSK ectodomain is also required. These results indicate that AChR phosphorylation is not the sole trigger of the clustering process. Moreover, our results suggest that, unlike the ectodomain of all other receptor tyrosine kinases, the MuSK ectodomain plays a required role in addition to simply mediating ligand binding and receptor dimerization, perhaps by helping to recruit NMJ components to a MuSK-based scaffold.