When I was first starting to play in bands, I remember suffering from what I now call "The Bedroom Syndrome". This means that when you play at home you feel like the uncrowned king of the guitar world, but then when you go play with your band, nothing is coming out right. Here are some of the main reasons this happens:
1) Do you wear your guitar strap, when you practice? Very often people will sit at home and develop killer chops, while crouching over the guitar. When you play live you most often stand up and the guitar hangs differently, which can make it almost impossible to recreate your awesomeness from the bedroom.
2) Do you ever practice at loud volumes? Your amp reacts differently when it's turned up. The louder it gets the more your tone will be "compressed", which means that the soft things you play feel too loud and the loud things you play feel "squashed". This can easily freak you out, and change your playing completely.
Also, your distortion pedals might have a tendency to feed back, which will cause you to not leave any space in your playing and probably overplay.
3) Do you practice your licks and tricks "in time"/with rhythm? Very often people sit at home and play super fast and awesome licks, but because nobody is playing with them they aren't considering the rhythm and timing of all the great stuff they play. This means that when they go play with the band, they're either not gonna know how to make it work, or play "out of time" and sound terrible.
4) Don't beat yourself up when you're playing live!! Another crucial thing to learn is to develop two different mind sets. You need a mind set that is extremely hard on yourself and focus on all the things that aren't happening in your playing, and use that when you're at home practicing.
Then you need another mind set, which is much more relaxed and fun, and you'll need this anytime you're playing with or for other people. If you hit a wrong note, forget about it- It's gone! [U]Just have fun![/U] No matter how important/nerve wrecking/career breaking a musical situation might be, NOTHING will be better from you being nervous while you play or you beating yourself up. The best advice I ever got was "Just go have fun, man". I wanna frame it and put it over my bed:)
Your ability to switch between these two mind sets will make a world of difference! It will drastically improve your playing because you can be really hard on yourself, without taking away your ability to have fun and perform. In the long run, this will mean that you'll get so much more joy out of playing music!