A detailed study of the electronic structure and magnetic configurations of the 50 % hole-doped double layered manganite LaSr$_2$Mn$_2$O$_7$ is presented. We demonstrate that the on-site Coulomb correlation (U) of Mn d electrons {it (i)} significantly modifies the electronic structure, magnetic ordering (from FM to AFM), and interlayer exchange interactions, and {it (ii)} promotes strong anisotropy in electrical transport, reducing the effective hopping parameter along the {it c} axis for electrically active $e_g$ electrons. This findng is consistent with observations of anisotropic transport -- a property which sets this manganite apart from conventional 3D systems. A half-metallic band structure is predicted with both the LSDA and LSDA+U methods. The experimentally observed A-type AFM ordering in LaSr$_2$Mn$_2$O$_7$ is found to be energetically more favorable with U $geq$ 7 eV. A simple interpretation of interlayer exchange coupling is given within double and super-exchange mechanisms based on the dependencies on U of the effective exchange parameters and $e_g$ state sub-band widths.
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