Roots explore the soil for water and nutrients through the continuous production of lateral roots. Lateral roots are formed at regular distances in a steadily elongating organ, but how future sites for lateral root formation become established is not yet understood. Here, we identified C-TERMINALLY ENCODED PEPTIDE 5 (CEP5) as a novel, auxin-repressed and phloem pole-expressed signal assisting in the formation of lateral roots. In addition, based on genetic and expression data, we found evidence for the involvement of its proposed receptor, XYLEM INTERMIXED WITH PHLOEM 1 (XIP1)/CEP RECEPTOR 1 (CEPR1), during the process of lateral root initiation. In conclusion, we report here on the existence of a peptide ligand-receptor kinase interaction that impacts lateral root initiation. Our results represent an important step towards the understanding of the cellular communication implicated in the early phases of lateral root formation.