During development, axonal projections have a remarkable ability to innervate correct dendritic subcompartments of their target neurons and to form regular neuronal circuits. Altered axonal targeting with formation of synapses on inappropriate neurons may result in neurodevelopmental sequelae, leading to psychiatric disorders. Here we show that altering the expression level of the polysialic acid moiety, which is a developmentally regulated, posttranslational modification of the neural cell adhesion molecule NCAM, critically affects correct circuit formation. Using a chemically modified sialic acid precursor (N-propyl-D: -mannosamine), we inhibited the polysialyltransferase ST8SiaII, the principal enzyme involved in polysialylation during development, at selected developmental time-points. This treatment altered NCAM polysialylation while NCAM expression was not affected. Altered polysialylation resulted in an aberrant mossy fiber projection that formed glutamatergic terminals on pyramidal neurons of the CA1 region in organotypic slice cultures and in vivo. Electrophysiological recordings revealed that the ectopic terminals on CA1 pyramids were functional and displayed characteristics of mossy fiber synapses. Moreover, ultrastructural examination indicated a "mossy fiber synapse"-like morphology. We thus conclude that homeostatic regulation of the amount of synthesized polysialic acid at specific developmental stages is essential for correct synaptic targeting and circuit formation during hippocampal development.