The differential adhesion hypothesis of development states that patterning of organisms, organs and tissues is mediated in large part by expression of cell adhesion molecules. The cues provided by cell adhesion molecules are also hypothesized to facilitate specific connectivity within the nervous system. In this study we characterize a novel mouse mutation in the gene Dscam (Down Syndrome Cell Adhesion Molecule). Vertebrate DSCAM is required for normal development of the central nervous system and has been best characterized in the visual system. In the visual system DSCAM is required for regulation of cell number, mosaic formation, laminar specificity, and refinement of retinal-tectal projections. We have identified a novel mutation in Dscam that results in a single amino acid substitution, R1018P, in the extracellular domain of the DSCAM protein. Mice homozygous for the R1018P mutation develop a subset of defects observed in Dscam null mice. In vitro analysis identified defects in DSCAM(R1018P) localization to filopodia. We also find that wild type DSCAM protein is constitutively cleaved and shed from transfected cells. This secretion is inhibited by the R1018P mutation. We also characterized a novel splice isoform of Dscam and identified defects in lamination of type 2 and type 6 cone bipolar cells in Dscam mutant mice. The identification and characterization of partial loss of function mutations in genes such as Dscam will be helpful in predicting signs and symptoms that may be observed in human patients with partial loss of DSCAM function.