Mutations of the tumor suppressor gene discs-large (dlg) lead to postsynaptic structural defects. Here, we report that mutations in dlg also result in larger synaptic currents at fly neuromuscular junctions. By selectively targeting DLG protein to either muscles or motorneurons using Gal-4 enhancer trap lines, we were able to rescue substantially the reduced postsynaptic structure in mutants. Rescue of the physiological defect was accomplished by presynaptic, but not postsynaptic targeting, consistent with our finding that miniature excitatory junctional currents were not changed in dlg mutants. These results suggest that DLG functions in the regulation of neurotransmitter release and postsynaptic structure. We propose that DLG is an integral part of a mechanism by which changes in both neurotransmitter release and synapse structure are accomplished during development and plasticity.