In nerve terminals, endocytosis in compensation for transmitter exocytosis was once thought 'housekeeping'. Now, several lines of research utilizing optical endocytic probes have coalesced into a new functional model. The model comprises two distinct endocytosis and vesicle-processing paradigms that are differentially regulated in response to demand for transmitter. Under some circumstances, such as recovery from short-term depression, it appears that endocytosis, and not exocytosis, is rate-limiting for transmitter release and is therefore a principal determinant of synaptic strength.