As the nervous system develops, there is an inherent variability in the connections formed between differentiating neurons. Despite this variability, neural circuits form that are functional and remarkably robust. One way in which neurons deal with variability in their inputs is through compensatory, homeostatic changes in their electrical properties. Here, we show that neurons also make compensatory adjustments to their structure. We analysed the development of dendrites on an identified central neuron (aCC) in the late Drosophila embryo at the stage when it receives its first connections and first becomes electrically active. At the same time, we charted the distribution of presynaptic sites on the developing postsynaptic arbor. Genetic manipulations of the presynaptic partners demonstrate that the postsynaptic dendritic arbor adjusts its growth to compensate for changes in the activity and density of synaptic sites. Blocking the synthesis or evoked release of presynaptic neurotransmitter results in greater dendritic extension. Conversely, an increase in the density of presynaptic release sites induces a reduction in the extent of the dendritic arbor. These growth adjustments occur locally in the arbor and are the result of the promotion or inhibition of growth of neurites in the proximity of presynaptic sites. We provide evidence that suggest a role for the postsynaptic activity state of protein kinase A in mediating this structural adjustment, which modifies dendritic growth in response to synaptic activity. These findings suggest that the dendritic arbor, at least during early stages of connectivity, behaves as a homeostatic device that adjusts its size and geometry to the level and the distribution of input received. The growing arbor thus counterbalances naturally occurring variations in synaptic density and activity so as to ensure that an appropriate level of input is achieved.