Social memory processing requires functional CA2 neurons, however the specific mechanisms that regulate their activity are poorly understood. Here, we document that SorCS2, a member of the family of the Vps10 family of sorting receptors, is highly expressed in pyramidal neurons of CA2, as well as ventral CA1, a circuit implicated in social memory. SorCS2 specifically localizes to the postsynaptic density and endosomes within dendritic spines of CA2 neurons. We have discovered that SorCS2 is a selective regulator of NMDA receptor surface trafficking in hippocampal neurons, without altering AMPA receptor trafficking. In addition, SorCS2 regulates dendritic spine density in CA2 neurons where SorCS2 expression is enriched, but not in dorsal CA1 neurons, which normally express very low levels of this protein. To specifically test the role of SorCS2 in behavior, we generated a novel SorCS2-deficient mouse, and identify a significant social memory deficit, with no change in sociability, olfaction, anxiety, or several hippocampal-dependent behaviors. Mutations in sorCS2 have been associated with bipolar disease, schizophrenia, and attention deficient-hyperactivity disorder, and abnormalities in social memory are core components of these neuropsychiatric conditions. Thus, our findings provide a new mechanism for social memory formation, through regulating synaptic receptor trafficking in pyramidal neurons by SorCS2.