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Neural circuitry formation depends on the molecular control of axonal projection during development. By screening with fluorophore-assisted light inactivation in the developing mouse brain, we identified cartilage acidic protein–1B as a key molecule for lateral olfactory tract (LOT) formation and named it LOT usher substance (LOTUS). We further identified Nogo receptor–1 (NgR1) as a LOTUS-binding protein. NgR1 is a receptor of myelin-derived axon growth inhibitors, such as Nogo, which prevent neural regeneration in the adult. LOTUS suppressed Nogo-NgR1 binding and Nogo-induced growth cone collapse. A defasciculated LOT was present in lotus-deficient mice but not in mice lacking both lotus- and ngr1. These findings suggest that endogenous antagonism of NgR1 by LOTUS is crucial for normal LOT formation.