Neuroligins (Nlgs) are a family of cell adhesion molecules thought to be important for synapse maturation and function. Mammalian studies have shown that different Nlgs have different roles in synaptic maturation and function. In Drosophila melanogaster, the roles of Drosophila neuroligin1 (DNlg1), neuroligin2, and neuroligin4 have been examined. However, the roles of neuroligin3 (dnlg3) in synaptic development and function have not been determined. In this study, we used the Drosophila neuromuscular junctions (NMJs) as a model system to investigate the in vivo role of dnlg3. We showed that DNlg3 was expressed in both the CNS and NMJs where it was largely restricted to the postsynaptic site. We generated dnlg3 mutants and showed that these mutants exhibited an increased bouton number and reduced bouton size compared with the wild-type (WT) controls. Consistent with alterations in bouton properties, pre- and postsynaptic differentiations were affected in dnlg3 mutants. This included abnormal synaptic vesicle endocytosis, increased postsynaptic density length, and reduced GluRIIA recruitment. In addition to impaired synaptic development and differentiation, we found that synaptic transmission was reduced in dnlg3 mutants. Altogether, our data showed that DNlg3 was required for NMJ development, synaptic differentiation, and function.