Efficient uptake of nutrients in both animal and plant cells requires tissue-spanning diffusion barriers separating inner tissues from the outer lumen/soil. However, we poorly understand how such contiguous three-dimensional superstructures are formed in plants. Here, we show that correct establishment of the plant Casparian Strip (CS) network relies on local neighbor communication. We show that positioning of Casparian Strip membrane domains (CSDs) is tightly coordinated between neighbors in wild-type and that restriction of domain formation involves the putative extracellular protease LOTR1. Impaired domain restriction in lotr1 leads to fully functional CSDs at ectopic positions, forming ‘half strips’. LOTR1 action in the endodermis requires its expression in the stele. LOTR1 endodermal expression cannot complement, while cortex expression causes a dominant-negative phenotype. Our findings establish LOTR1 as a crucial player in CSD positioning acting in a directional, non-cell-autonomous manner to restrict and coordinate CS positioning.