Trans-synaptic adhesion between Neurexins (Nrxs) and Neuroligins (Nlgs) is thought to be required for proper synapse organization and modulation, and mutations in several human Nlgs have shown association with autism spectrum disorders. Here we report the generation and phenotypic characterization ofDrosophila neuroligin2 (dnlg2) mutants. Loss ofdnlg2results in reduced bouton numbers, aberrant presynaptic and postsynaptic development at neuromuscular junctions (NMJs), and impaired synaptic transmission. Indnlg2mutants, the evoked responses are decreased in amplitude, whereas the total active zone (AZ) numbers at the NMJ are comparable to wild type, suggesting a decrease in the release probability. Ultrastructurally, the presynaptic AZ number per bouton area and the postsynaptic density area are both increased indnlg2mutants, whereas the subsynaptic reticulum is reduced in volume. We show that both presynaptic and postsynaptic expression of Dnlg2 is required to restore synaptic growth and function indnlg2mutants. Postsynaptic expression of Dnlg2 indnlg2mutants and wild type leads to reduced bouton growth whereas presynaptic and postsynaptic overexpression in wild-type animals results in synaptic overgrowth. Since Nlgs have been shown to bind to Nrxs, we created double mutants. These mutants are viable and display phenotypes that closely resemble those ofdnlg2anddnrxsingle mutants. Our results provide compelling evidence that Dnlg2 functions both presynaptically and postsynaptically together with Neurexin to determine the proper number of boutons as well as the number of AZs and size of synaptic densities during the development of NMJs.