Retrograde signaling is an essential component of synaptic development and physiology. Previous studies show that bone morphogenetic protein (BMP)-dependent retrograde signaling is required for the proper development of the neuromuscular junction (NMJ) in Drosophila. These studies, moreover, raised the significant possibility that the development of central motor circuitry might similarly be reliant on such signaling. To test this hypothesis, retrograde signaling between postsynaptic motoneurons and their presynaptic interneurons is examined. Postsynaptic expression of an adenylate cyclase encoded by rutabaga (rut), is sufficient to strengthen synaptic transmission at these identified central synapses. Results are presented to show that the underlying mechanism is dependent on BMP retrograde signaling. Thus, presynaptic expression of an activated TGF-beta receptor, thickvien (tkv), or postsynaptic expression of a TGF-beta ligand, glass-bottom boat (gbb), is sufficient to phenocopy strengthening of synaptic transmission. In the absence of gbb, endogenous synaptic transmission is significantly weakened and, moreover, postsynaptic overexpression of rut is unable to potentiate synaptic function. Potentiation of presynaptic neurotransmitter release, mediated by increased postsynaptic expression of gbb, is dependent on normal cholinergic activity, indicative that either the secretion of this retrograde signal, or its transduction, is activity dependent. Thus, in addition to the development of the NMJ and expression of myoactive FMRFamide-like peptides in specific central neurons, the results of the present study indicate that this retrograde signaling cascade also integrates the development and function of central motor circuitry that controls movement in Drosophila larvae.