The L1 family of cell adhesion molecules is predominantly expressed in the nervous system. Mutations in human L1 cause neuronal diseases such as HSAS, MASA, and SPG1. Here we show that sax-7 gene encodes an L1 homologue in Caenorhabditis elegans. In sax-7 mutants, the organization of ganglia and positioning of neurons are abnormal in the adult stage, but these abnormalities are not observed in early larval stage. Misplacement of neurons in sax-7 mutants is triggered by mechanical force linked to body movement. Short and long forms of SAX-7 exhibited strong and weak homophilic adhesion activities in in vitro aggregation assay, respectively, which correlated with their different activities in vivo. SAX-7 was localized on plasma membranes of neurons in vivo. Expression of SAX-7 only in a single neuron in sax-7 mutants cell-autonomously restored its normal neuronal position. Expression of SAX-7 in two different head neurons in sax-7 mutants led to the forced attachment of these neurons. We propose that both homophilic and heterophilic interactions of SAX-7 are essential for maintenance of neuronal positions in organized ganglia.