Neuroligins belong to a highly conserved family of cell adhesion molecules that have been implicated in synapse formation and function. However, the precise in vivo roles of Neuroligins remain unclear. In the present study, we have analyzed the function of Drosophila neuroligin 2 (dnl2) in synaptic development and function. We show that dnl2 is strongly expressed in the embryonic and larval CNS and at the larval neuromuscular junction (NMJ). dnl2 null mutants are viable but display numerous structural defects at the NMJ, including reduced axonal branching and fewer synaptic boutons. dnl2 mutants also show an increase in the number of active zones per bouton but a decrease in the thickness of the subsynaptic reticulum and length of postsynaptic densities. dnl2 mutants also exhibit a decrease in the total glutamate receptor density and a shift in the subunit composition of glutamate receptors in favor of GluRIIA complexes. In addition to the observed defects in synaptic morphology, we also find that dnl2 mutants show increased transmitter release and altered kinetics of stimulus-evoked transmitter release. Importantly, the defects in presynaptic structure, receptor density, and synaptic transmission can be rescued by postsynaptic expression of dnl2. Finally, we show that dnl2 colocalizes and binds to Drosophila neurexin (dnrx) in vivo. However, whereas homozygous mutants for either dnl2 or dnrx are viable, double mutants are lethal and display more severe defects in synaptic morphology. Altogether, our data show that, although dnl2 is not absolutely required for synaptogenesis, it is required postsynaptically for synapse maturation and function.