The complexity and diversity of a neural network requires regulated elongation and branching of axons, as well as the formation of synapses between neurons. In the present study we explore the role of AP-2, a key endocytic adaptor protein complex, in the development of rat hippocampal neurons. We found that the loss of AP-2 during the early stage of development resulted in impaired axon extension and failed maturation of the axon initial segment (AIS). Normally the AIS performs two tasks in concert, stabilizing neural polarity and generating action potentials. In AP-2 silenced axons polarity is established, however there is a failure to establish action potential firing. Consequently, this impairs activity-driven Ca2+ influx and exocytosis at nerve terminals. In contrast, removal of AP-2 from older neurons does not impair axonal growth or signaling and synaptic function. Our data reveal that AP-2 has important roles in functional axogenesis by proper extension of axon as well as the formation of AIS during the early step of neurodevelopment.