Decidability of definitional equality and conversion of terms into canonical form play a central role in the meta-theory of a type-theoretic logical framework. Most studies of definitional equality are based on a confluent, strongly-normalizing notion of reduction. Coquand has considered a different approach, directly proving the correctness of a practical equivalance algorithm based on the shape of terms. Neither approach appears to scale well to richer languages with, for example, unit types or subtyping, and neither provides a notion of canonical form suitable for proving adequacy of encodings. In this paper we present a new, type-directed equivalence algorithm for the LF type theory that overcomes the weaknesses of previous approaches. The algorithm is practical, scales to richer languages, and yields a new notion of canonical form sufficient for adequate encodings of logical systems. The algorithm is proved complete by a Kripke-style logical relations argument similar to that suggested by Coquand. Crucially, both the algorithm itself and the logical relations rely only on the shapes of types, ignoring dependencies on terms.