Diacylglycerol (DAG) is a prominent endogenous modulator of synaptic transmission. Recent studies proposed two apparently incompatible pathways, via protein kinase C (PKC) and via Munc13. Here we show how these two pathways converge. First, we confirm that DAG analogs indeed continue to potentiate transmission after PKC inhibition (the Munc13 pathway), but only in neurons that previously experienced DAG analogs, before PKC inhibition started. Second, we identify an essential PKC pathway by expressing a PKC-insensitive Munc18-1 mutant in munc18-1 null mutant neurons. This mutant supported basic transmission, but not DAG-induced potentiation and vesicle redistribution. Moreover, synaptic depression was increased, but not Ca2+-independent release evoked by hypertonic solutions. These data show that activation of both PKC-dependent and -independent pathways (via Munc13) are required for DAG-induced potentiation. Munc18-1 is an essential downstream target in the PKC pathway. This pathway is of general importance for presynaptic plasticity.