Diacylglycerol (DAG) is an important lipid second messenger. DAG signalling is terminated by conversion of DAG to phosphatidic acid (PA) by diacylglycerol kinases (DGKs). The neuronal synapse is a major site of DAG production and action; however, how DGKs are targeted to subcellular sites of DAG generation is largely unknown. We report here that postsynaptic density (PSD)-95 family proteins interact with and promote synaptic localization of DGKι. In addition, we establish that DGKι acts presynaptically, a function that contrasts with the known postsynaptic function of DGKζ, a close relative of DGKι. Deficiency of DGKι in mice does not affect dendritic spines, but leads to a small increase in presynaptic release probability. In addition, DGKι-/- synapses show a reduction in metabotropic glutamate receptor-dependent long-term depression (mGluR-LTD) at neonatal (∼2 weeks) stages that involve suppression of a decrease in presynaptic release probability. Inhibition of protein kinase C normalizes presynaptic release probability and mGluR-LTD at DGKι-/- synapses. These results suggest that DGKι requires PSD-95 family proteins for synaptic localization and regulates presynaptic DAG signalling and neurotransmitter release during mGluR-LTD.