Cadherins and the immunoglobulin (Ig) proteins give rise to a multitude of surface receptors, which function as diverse cell adhesion molecules (CAMs) or signal-transducing receptors. These functions are often interdependent, and rely on a high degree of specificity in homophilic binding as well as heterophilic interactions. The Drosophila receptor Dscam is an exceptional example of homophilic binding specificity involved in a number of important biological processes, such as neural wiring and innate immunity. Combinatorial use of alternatively spliced Ig-domains enables the generation of an estimated 18,000 isoform-specific homophilic receptor pairs. Although isoform diversity of Dscam is unique to arthropods, recent genetic analysis of vertebrate DSCAM (Down Syndrome Cell Adhesion Molecule) genes has revealed an intriguing conservation of molecular functions underlying neural wiring. This review covers the multiple functions of Dscam across different species highlighting its remarkable versatility as well as its conserved basic functions in neural development. We discuss how an unprecedented expansion of complex alternative splicing has been uniquely employed by arthropods to generate diverse surface receptors, important for cell-cell communication, molecular self-recognition in neurons, and innate immune defenses. We end with a speculative hypothesis reconciling the striking differences in Dscam and DSCAM gene structures with their conserved functions in molecular recognition underlying neural circuit formation.