Drosophila circadian behavior relies on the network of heterogeneous groups of clock neurons. Short- and long-range signaling within the pacemaker circuit coordinates molecular and neural rhythms of clock neurons to generate coherent behavioral output. The neurochemistry of circadian behavior is complex and remains incompletely understood. Here we demonstrate that the gaseous messenger nitric oxide (NO) is a signaling molecule linking circadian pacemaker to rhythmic locomotor activity. We show that mutants lacking nitric oxide synthase (NOS) have behavioral arrhythmia in constant darkness, although molecular clocks in the main pacemaker neurons are unaffected. Behavioral phenotypes of mutants are due in part to the malformation of neurites of the main pacemaker neurons, s-LNvs. Using cell-type selective and stage-specific gain- and loss-of-function of NOS, we also demonstrate that NO secreted from diverse cellular clusters affect behavioral rhythms. Furthermore, we identify the perineurial glia, one of the two glial subtypes that form the blood-brain barrier, as the major source of NO that regulates circadian locomotor output. These results reveal for the first time the critical role of NO signaling in the Drosophila circadian system and highlight the importance of neuro-glial interaction in the neural circuit output.