The regulation of synaptic efficacy is essential for the proper functioning of neural circuits. If synaptic gain is set too high or too low, cells are either activated inappropriately or remain silent. There is extra complexity because synapses are not static, but form, retract, expand, strengthen, and weaken throughout life. Homeostatic regulatory mechanisms that control synaptic efficacy presumably exist to ensure that neurons remain functional within a meaningful physiological range. One of the best defined systems for analysis of the mechanisms that regulate synaptic efficacy is the neuromuscular junction. It has been shown, in organisms ranging from insects to humans, that changes in synaptic efficacy are tightly coupled to changes in muscle size during development. It has been proposed that a signal from muscle to motor neuron maintains this coupling. Here we show, by genetically manipulating muscle innervation, that there are two independent mechanisms by which muscle regulates synaptic efficacy at the terminals of single motor neurons. Increased muscle innervation results in a compensatory, target-specific decrease in presynaptic transmitter release, implying a retrograde regulation of presynaptic release. Decreased muscle innervation results in a compensatory increase in quantal size.