Our work demonstrates the presence of axo-glial septate junctions (AGSJs) in Drosophila nerves and establishes structural and molecular similarities between Drosophila and vertebrate AGSJs. Drosophila proteins: Neurexin IV (NRX IV), Contactin (CONT) and Neuroglian (NRG) form a tripartite complex that localizes to AGSJs. Their murine orthologs Contactin-associated protein (Caspr), Contactin (Cont) and Neurofascin (NF155) also form a complex at the paranodal AGSJs in myelinated axons. Drosophila nrx IV, cont and nrg, and mouse Caspr, Cont and NF155 mutants all fail to organize AGSJs. In addition, double mutant combinations and triple mutants of nrx IV, cont and nrg in Drosophila show severe peripheral glial migration defects and axonal degeneration in embryonic peripheral nerves, pointing to an important relationship between axon-glial interactions and axonal/glial cytoskeleton. We also discovered that in the embryonic CNS midline NRX IV functions independent of CONT and NRG, and interacts in trans with a midline glia-specific immunoglobulin (Ig) domain protein, Wrapper (WRAP). This interaction coordinates axon-glial interactions, axonal ensheathment and glial migration in the CNS midline. Together these studies lead us to hypothesize that glial migration, ensheathment, and axon degeneration are mechanistically linked. Our findings provide the basis to approach the fundamental question of how axonal ensheathment is coordinated with underlying axonal and glial cytoskeletal elements during neuron-glial interactions. Most importantly, we ask which axon-glial signaling mechanisms are essential for maintaining axonal health and neuronal functions. Identification of these mechanisms using in vivo genetic analysis will provide a basis for our attempts to identify the cellular and molecular mechanisms precipitating pathological demyelination and impeding remyelination.