MicroRNAs are important regulators of gene expression, yet the functional outputs of most microRNA-target interactions remain elusive. Here we introduce the Drosophila melanogaster microRNA sponge (miR-SP) as a powerful transgenic technology to dissect the function of every microRNA with precise spatiotemporal resolution. miR-SPs can be used to characterize tissue-specific microRNA loss-of-function phenotypes, define the spatial regulation of their effectors and uncover interactions between microRNAs and other genes. Using themiR-SP system, we identified an essential role of the conserved microRNA miR-8, in neuromuscular junction formation. Tissue-specific silencing revealed that postsynaptic activity of miR-8 is important for normal neuromuscular junction morphogenesis. Given that miR-SPs rely on a bipartite modular expression system, they could be used to elucidate the endogenous function of microRNAs in any species in which conditional expression can be achieved.