UNC-104 is the Caenorhabditis elegans homolog of kinesin-3 KIF1A known for its fast shuffling of synaptic vesicle protein transport vesicles in axons. SYD-2 is the homolog of liprin-α in C. elegans known to activate UNC-104; however, signals that trigger SYD-2 binding to the motor remain unknown. Because SYD-2 is a substrate of PTP-3/LAR PTPR, we speculate a role of this phosphatase in SYD-2-mediated motor activation. Indeed, coimmunoprecipitation assays revealed increased interaction between UNC-104 and SYD-2 in ptp-3 knockout worms. Intramolecular FRET analysis in living nematodes demonstrates that SYD-2 largely exists in an open conformation state in ptp-3 mutants. These assays also revealed that nonphosphorylatable SYD-2 (Y741F) exists predominately in folded conformations, while phosphomimicking SYD-2 (Y741E) primarily exists in open conformations. Increased UNC-104 motor clustering was observed along axons likely as a result of elevated SYD-2 scaffolding function in ptp-3 mutants. Also, both motor velocities as well as cargo transport speeds were visibly increased in neurons of ptp-3 mutants. Lastly, epistatic analysis revealed that PTP-3 is upstream of SYD-2 to regulate its intramolecular folding.