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The leukocyte common antigen related receptor (LAR) is a member of the LAR receptor protein tyrosine phosphatase (RPTP) family of synaptic adhesion molecules that contribute to the proper alignment and specialization of synaptic connections in the mammalian brain. LAR-RPTP members have been genetically associated with neuropsychiatric disorders, but the molecular consequences of genetic perturbations of LAR remain unstudied. Using exome sequencing data from psychiatric patients and controls, we identify rare missense variants of LAR that render the extracellular domain (ECD) unstable and susceptible to proteolytic cleavage. Using recombinant and cellular systems, we describe three variants that cause disruption of the LAR:NGL-3 interaction, which results in loss of transcellular adhesion and synaptogenic effects. Furthermore, we show that overexpression of two of these variants elicit altered morphological phenotypes in an imaging-based morphological profiling assay compared to wild type LAR, suggesting that destabilization of the LAR ECD has broad effects on LAR function. In conclusion, our study identifies three rare, missense variants in LAR that could provide insights into LAR involvement with psychiatric pathobiology.