The size and shape of dendritic arbors are prime determinants of neuronal connectivity and function. We asked how ON-OFF direction-selective ganglion cells (ooDSGCs) in mouse retina acquire their bistratified dendrites, in which responses to light onset and light offset are segregated to distinct strata. We found that the transcriptional regulator Satb1 is selectively expressed by ooDSGCs. In Satb1 mutant mice, ooDSGC dendrites lack ON arbors, and the cells selectively lose ON responses. Satb1 regulates expression of a homophilic adhesion molecule, Contactin 5 (Cntn5). Both Cntn5 and its co-receptor Caspr4 are expressed not only by ooDSGCs, but also by interneurons that form a scaffold on which ooDSGC ON dendrites fasciculate. Removing Cntn5 from either ooDSGCs or interneurons partially phenocopies Satb1 mutants, demonstrating that Satb1-dependent Cntn5 expression in ooDSGCs leads to branch-specific homophilic interactions with interneurons. Thus, Satb1 directs formation of a morphologically and functionally specialized compartment within a complex dendritic arbor.