Time-lapse microscopy in developmental biology is an emerging tool for functional genomics. Phenotypic effects of gene perturbations can be studied non-invasively at multiple time points in chronological order. During metamorphosis of Drosophila melanogaster, time-lapse microscopy using fluorescent reporters allows visualization of alternative fates of larval muscles, which are a model for the study of genes related to muscle wasting. While doomed muscles enter hormone-induced programmed cell death, a smaller population of persistent muscles survives to adulthood and undergoes morphological remodeling that involves atrophy in early, and hypertrophy in late pupation. We developed a method that combines in vivo imaging, targeted gene perturbation and image analysis to identify and characterize genes involved in muscle development. Macrozoom microscopy helps to screen for interesting muscle phenotypes, while confocal microscopy in multiple locations over 4-5days produces time-lapse images that are used to quantify changes in cell morphology. Performing a similar investigation using fixed pupal tissues would be too time-consuming and therefore impractical. We describe three applications of our pipeline. First, we show how quantitative microscopy can track and measure morphological changes of muscle throughout metamorphosis and analyze genes involved in atrophy. Second, our assay can help to identify genes that either promote or prevent histolysis of abdominal muscles. Third, we apply our approach to test new fluorescent proteins as live markers for muscle development. We describe mKO2 tagged Cysteine proteinase 1 (Cp1) and Troponin-I (TnI) as examples of proteins showing developmental changes in subcellular localization. Finally, we discuss strategies to improve throughput of our pipeline to permit genome-wide screens in the future.